
r IR!^ 



POLITICAL 





1 



iLIBriARY OF CONGRESS. # 



Ji^p- ■ |opnnght |fo ^ 

i T / 5 # 

I UNITED STATES OF AMERICA. J 

3] 



COMMON SENSE 



OR, 



First Steps in Political Economy, 

FOR THE USE OF 

* 

FAMILIES AND NORMAL CLASSES, 



Pupils in District, Elementary and Grammar Schools; 
Being a Popular Introduction to 
THE MOST IMPORTANT TRUTHS REGARDING 
LABOR AND CAPITAL. 

J.^p^ BY 

m/ RNLEVERSON, Dr. Ph., M. A., 
Attorney-at-Law, 
Author of " Copyright and Patents, or Property in Thought," " The 
Natural History of a Cause, according to English and English- 
derived Procedure ;" "The Rational System of Legal 
Procedure," "Rational Schools," "The Uses 
and Functions of Money ;" " The American 
System of Education," " Draft of a 
Constitution for Colorado," 
etc., etc. 



(A-^ 





NEW YORK: 

THE AUTHORS' PUBLISHING COMPANY. 

CHAIN & HARDY : Denver, Col. 

1876. 




^ 



^6^ 



Entered, according to Act of Congress, in the year 1S76, by 

MONTAGUE R. LEVERSON, 

In the office of the Librarian of Congress at Washington. 



TO 

GEOEGE AND JAMES LEYEESON, 

IN TESTIMONY OP THEIB GENEROUS ZEAL IN 

THE CAUSE OF GOOD EDUCATION, 

4ND TO THE 

TEAGHEB8 OF THE UNITED ST ATE 8, 

WHOSE NOBLE LABOES 

ARE SO ^SUFFICIENTLY APPBECIATED 

AND EEWARDED, 
This book is affectionately inscribed by 

THE AUTHOE. 



"PEEFACE. 

This work is published, chiefly, in the hope of its haTing some 
influence towards the introduction of the teaching of moral and 
economical science in our schools. It is also intended to help 
all persons, including children, even without the aid of a teacher, 
to acquire some knowledge of the most important truths of 
those sciences. 

It will, it is hoped, be impossible for any person, after reading 
this little work, to question the practicability of imparting a 
competent knowledge of morals and of political economy even 
to young children. The circumstances which gave occasion to 
the work furnish additional evidence of this fact. 

In the winter of 1867-8 the author, as a volunteer teacher, 
gave a series of lessons in the Saturday Normal School of New 
York to a class of post-graduate teachers "on the object and 
method of imparting to young children a knowledge of the 
conditions of human well-being, commonly called 'political 
economy '. " The class numbered about thirty at its commence- 
ment, and about thirty-five at its close, and, although the teach- 
ers could gain no advancement whatever from their attendance, 
their punctuality was remarkable, and equalled, if it did not 
exceed, that of any other class in the institution, although 
attendance at such other classes on the part of the under-grad- 
uate teachers was indispensable to their advancement. The 
teachers who attended the author's lessons became enthusiastic 
for the introduction of the teaching of the science into our 
schools, while the effect upon their own minds, in the additional 
power it gave them in their teaching was such, that nearly every 
member of that class has become noted as a specially skilled 
and earnest teacher. But, although there was patent the cer- 
tainly unusual fact of a gentleman, unconnected with the 



Q PREFACE. 

schools, giving his time to further the cause of good education, 
of a number of post graduate teachers regularly giving up their 
one holiday a week for the sake of benefitting by his labors, not 
a single School Commissioner or Trustee of the city of New 
York ever pul foot inside the class-room, which, nevertheless, 
was regularly attended by one of New York's most respected 
merchants ! 

Repeatedly, in the course of the lessons, the teachers asked the 
author to recommend them text-books, to enable them to pursue 
further the studies to which he introduced them, and particu- 
larly for use in schools. 

Beyond referring them to standard works upon Economic 
Science, there were none to which the author could refer as 
specially adapted for either purpose. Admirable as are the 
works of Mr. "VVm. Ellis, and great as has been the author's use 
of Mr. Ellis's teachings, these works are not appropriate for use 
in our schools, and, at the earnest request of those teachers, the 
author wrote a book on political economy, which he hopes 
may serve as an introductory text-book. 

In the suggestions which are given to teachers some hints will 
be found as to the- use to be made of this book. The author 
desires, however, to insist especially on the truth that the most 
efficient part of all teaching is the okal; and he urges on teachers 
to fit themselves to give that kind of teaching, using this work 
as a text-book for themselves even more than for their pupils ; 
but, also employing this work as a eeadixg book, carefully see- 
ing that the pupils understand each sentence before proceeding 
to another. The great attention paid in nearly all our schools 
to the study of grammar will render this task comparatively 
easy, while the practical application of the lessons in grammar 
studied by the pupils, to the perusal and study of a work on a 
difi"erent science, will serve to give them an interest in their 
grammatical lessons, which the judicious teacher will know 
bow to utilize. 

This work was written under circumstances when the author 
was almost without resources in the way of referring to authori- 
ties. He has referred in all cases, in the text, to the authorities 
he has quoted, except in the case of quoting from the works of 



PBEFAGR f 

Mr. Wm. Ellis. Strange as it may seem, it is yet a fact that, 
though the author is conscious of having repeatedly availed 
himself of Mr. Ellis's ideas, and often even of his language, he 
is unable to refer any quotation to its proper work, or place in 
that work. 

When writing this book, the author had none of Mr. Ellis's 
works at hand for reference, nothing but a rather copious ab- 
stract of those works made many years before. In many cases 
his quotations are unconscious, in all, as imperfect as might be 
expected from their being made from memory, aided only by 
such abstract. 

Much of what the author has learned of political economy — all 
that he learned, otherwise than by experience, of the method of 
teaching it— he learned from Mr. Wm. Ellis and from Mr. 
Shields, one of the ablest of Mr. Ellis's disciples, but chiefly 
in converse with them — that is, orally. Whenever, then, any co- 
incidence of ideas or language between this book and any of Mr. 
Ellis's may be found, to Mr. Ellis and not to the author belongs 
the merit of originality ; nevertheless, in most cases, the 
author's use of such ideas will have been derived from Mr. 
Ellis's conversation and oral teachings, ^which, in the author's 
case, generally preceded the publication by Mr. Ellis of his 
works,) his books having been developed by Mr. Ellis out of his 
oral discussions with his numerous disciples, while his ideas and 
language imparted to, and in many cases assimilated by his 
disciples, have been afterwards given to the world in his pub- 
lished writings. 

Under these circumstances, reference on each occasion to the 
particular work in which any idea might be found became im- 
possible, and this general acknowledgement the more necessary. 

The author has also to acknowledge his indebtedness to 
Mr. Charles Moran, and specially to Mr. Eichard L. Dugdale, 
both of New York, for their kindness in revising the manuscript, 
and for many most valuable criticisms and suggestions. 

Essential as it is that our future legislators should not be 
allowed to grow up ignorant of the important truths of economic 
science, it is the moral teachings of the science which the 
author regards as of the greatest moment. 



8 PREFACE. 

The opponents of our public schools are right in urging the 
deplorable absence of moral teaching and training, so "conspicu- 
ous by their absence" from the curriculum, as an objection and a 
fatal objection to the existing system. Even as the economic 
blunders of Congress are the logical consequences of the ab- 
sence of all teaching of economic science from our common 
schools, in which schools its members were mostly reared, and 
•which are the nurseries of our future statesmen, even so the 
moral obliquity of citizens and officials, the worship of success 
without regard to the means by which it has been obtained, the 
corruption and untrustworthiness which are rife among us, are 
the results of the absence of moral teaching and training from 
those same schools in which the merchant and official have been 
trained. 

To remove the evil the cause must be removed. Let the future 
generation of statesmen and of citizens receive in childhood that 
teaching and training by which alone they can be preserved 
from like errors ; and when they grow up they will not only 
avoid those errors themselves, but correct those of their prede- 
cessors. 

But how shall this instruction be provided for the future citi- 
zen when our teachers themselves are ignorant alike of tho 
science and of the method of teaching it ? The answer is ob- 
vious. Introduce the teaching of the science and of the method 
of teaching it into the Normal Schools. 

Nowhere in any normal school on this broad continent, so far 
as the author has been able to learn, is any such instruction 
being imparted to the future teachers of our youth as we now see 
to be so necessary ; yet the teachers are ready to be taught, as 
the author's experiment in 1867-8 testifies, and as the following 
fact will serve further to demonstrate : 

The author attended the meeting of the Teachers' Association, 
held at Boston some years ago, and availed himself of the discus- 
sion following the reading of a paper in one of the sections, to 
introduce the subject of teaching political economy to the 
yonng. When his ten minutes had expired, by the unanimous 
vote of the meeting the entire residue of the time appointpd for 
discussion on the paper which had given the pretext for his 



PREFACE. 9 

observations, was given to the author ; and at its termination 
the discussion was continued to a free hour, at the close of which 
one of the teachers, in the name of himself and all the teachers 
present, and amid their enthusiastic acclamations, declared the 
discussion thus rather irregularly introduced to have been more 
profitable than all that had theretofore taken place at the meet- 
ing of the Association, and asked the author to appoint a day, in 
the daytime or evening, after the association exercises should be 
closed, to resume the subject. To his own great regret, he was 
unable to comply with the request, the calls of business having 
necessitated his leaving Boston before the close of the meeting. 

The teachers, then, are ready, but they are obliged to wait 
upon those to whose care our educational interests are confided, 
and these last are hardly likely to make the required move until 
urged on by outside pressure. Let press and people, then, join 
in the cry, EEroEM the Nobmal Schools, and thus make our 
Centennial "fruitful in good works." 

Denveb, Colokado, July 4th, 1876. 



*»* Meview Questions and some suggestions to help 
teachers and self-students will be found in the Ajjpen- 
di'X at end of the work. 

1* 



CONTENTS. 



CHAPTER I. 

PAGE. 

Comforts surrounding children in the United States ; 
how procured. history of a stocking. idea and 
name of wealth. importance of the correct use of 
words to express ideas i^ 

CHAPTER II. 

Some necessaries not produced by labor and not in- 
cluded IN THE TERM WEALTH. EaRTH, AIR, WATER, WHEN 
THEY ARE NOT, AND WHEN THEY ARE WEALTH. PRODUC- 
TION ; WHAT IT IS. Labor creates nothing. It changes 

THE position OF MATTER. We LIVE ON THE PRODUCTS OF 
PAST LABOR. IDEAS OF ECONOMY, SKILL AND KNOWLEDGE 
EVOLVED, AND NAMES GIVEN 21 

CHAPTER III. 

Division of labor ; increased efficiency resulting from. 
Co-opERATioN. Household labors. Training of the 
young. Special fitness of women for certain labors. . 30 

CHAPTER IV. 

Interchange. Necessity of considering and satisfying 
the wants of others 36 

CHAPTER V. 

Protection to life and property. Honesty. Small effi- 
ciency of GOVERNMENTS. CONSCIENCE THE MOST EFFICIENT 

(11) 



xii CONTENTS. 

PAGE. 

POLICE. Effects of dishonesty. Demoralizing ij^flu- 

ENCE OF successful DISHONESTY 38 

CHARTER VI. 

The YOUNG not possessed of wealth. Their wants sup- 
plied. Sale and purchase of labor. Sellers of labor 
and not the wealth-possessors have the enjoyment of 

THE PORTION OF THE LATTER'S WEALTH EMPLOYED IN PRO- 
DUCTION. Wages. Capital. Interest. Average wages 

DETERMINED BY THE PRODUCTIVENESS OF LABOR. INDIVID- 
UAL WAGES ; HOW DETERMINED 44 

CHAPTER VII. 

Profit. Its uncertainty. Analysis of. Rates, how de- 
termined. Capital the best friend of labor 55 

CHAPTER VIII- 
Property in land. Rent ; how regulated 59 

CHAPTER IX. 

Value. Demand and supply. Intrinsic value a verbal 
contradiction. Value ; how determined. Market 
value. Speculators. Average value. Cost of repro- 
duction. Labor and utility essential to value 68 

CHAPTER X. 

Means of facilitating interchange. Weights and meas- 
ures. Measure of value. Money. Gold and silver. 
Properties which adapt them for use as money. The 
DOLLAR. Absurdity of attempts to fix by law the 
relative values of gold and silver. Causes of fluctu- 
ations IN THE VALUE OF MONEY 78 



CONTENTS. xiii 

CHAPTER XI. 



PAGE. 

Price. Fluctuations. Warning furnished by rise in 

PRICE 88 



CHAPTER Xn. 
Strikes, combinations and lock-oiA'S. The purchase 

POWER of wages, not THEIR AMOUNT IN MONEY, THE 
PROPER SUBJECT FOR THE LABORER'S CONSIDERATION. RE- 
DUCTION OF HOURS OF LABOR. TRADES UNIONS. COMBINA- 
TIONS TO KEEP DOWN WAGES. " CO-OPERATIVE " STORES, 
FACTORIES, ETC 92 



CHAPTER XIII. 

Credit. Facilitates interchange. Improper for domes- 
tic EXPENDITURE. CONSEQUENCES OF THE NONFULFILMENT OF 
ENGAGEMENTS. LAWS FOR THE RECOVERY OF DEBTS, INJURI- 
OUS EFFECTS OF , 1 12 



CHAPTER XIV. 

Bills of exchange. P. O. money orders. Rates of Ex- 
change. Par of exchange 117 



CHAPTER XV. 

Banks and banking. Deal in security. Deposit ac- 
counts. Drawing accounts. Clearing accounts. Na- 
tional BANK ACT. Savings banks 124 



CHAPTER XVI. 

Interest; limits to. Market rates. Average rates. 
Usury laws 134 



xiv CONTENTS. 

CHAPTER XVII. 

PAGE. 

Paper money ; advantages of. Inconvertable paper 
money ; effect of, dishonesty of. superior honesty 
displayed by the french people over those of the 
United States 141 

' CHAPTER XVIII. 

Commercial crises and panics. Their causes ; aggrava- 
ted BY USURY LAWS AND GOVERNMENT INTERFERENCE. 

How to be prevented 153 

CHAPTER XIX. 

Foreign commerce. Protection to native industry. 
" Pauper labor " of Europe considered. Evil results 
of the tariff on native industry 160 

CHAPTER XX. 

Knowledge acquired by the attentive student. His 
future happiness dependent on his own conduct. In- 
dividual success dependent on services rendered. 
Cause of apparent exceptions. Canon of good and 
evil 178 

APPENDIX. 
Review questions 183 



First Steps In Political Economy. 



CHAPTEE I. 

Comforts surrounding children in the United States. How 
PROCURED. History of a stocking. Idea and name of 
WEALTH. Importance of the correct use of words to ex- 
press IDEAS. 

1. The comforts of cliildren in the United 
States. — Tiie cliildren of tliis favored land rise 
every morning from a comfortable bed to find cloth- 
,ing ready for them' to put on, water, (perbaps brought 
from a great distance,) for tbeir use, soap, towel, 
comb and brush, all ready to their hands. 

Having washed and dressed, they help, if old 
enough and in good health, in kindling the fires and 
sweeping and cleaning the rooms and furniture, they 
brush their boots and shoes, and help to make 
ready the breakfast for the family. 

Having breakfasted, they gather theK books to- 
gether and go to school. There they find a school- 
room, generally well warmed, supplied with fresh, 

(15) 



IQ COMMON SENSE; OB, 

pure air, and fitted with desks, maps, charts, slates 
and many other things to add to their comfort, 
or to help them in gaining knowledge, while a 
kind and earnest teacher is waiting to show them 
the hard places, and make their lessons plain and 
easy. 

The school session over, the children return home 
to a loving father and mother, who are happy when 
their children are happy, and are always ready to try 
to save them from trouble or harm. 

At home they again find food ready for them, and 
after learning a few easy lessons for the morrow, and 
spending some time in playing with dolls or balls, 
bats, tops or skates, they bathe in a tub of water, 
hot or cold, as may be best for their health or clean- 
liness, and go to bed without any fear lest any one 
of the comforts enjoyed to-day should be wanting 
to them to-morrow. 

2. Children have become so used to all these com- 
forts and enjoyments that they do not think how 
much time has been spent, and how much labor 
done, not only by their parents, but by many other 
persons also, in order to get these things for them, 
and they give little thought to the difficulties which 
had to be overcome to bring many of the things 
they use from different parts of the world. 



FIBST STJEPS IiV POLITICAL ECONOMY. X^j 

3. Let US take up one of tlie articles in common 
use among children, say a pair of woolen stockings, 
and trace its history from its beginning until it is 
brought to them for use. Let us also see what kind 
of men and women they must be by whom the stock- 
ing is produced and supplied to the children. 

4. History of a Stocking. — The wool of which 
the stocking is woven was grown on the backs of 
sheep, raised with much care and labor, perhaps 
■in Ohio or Iowa, Texas, New Mexico, Colorado or 
California, or possibly in Australia or the Cape of 
Good Hope. Sheared in due season, it has been 
transported in cars, draT\Ti by steam locomotives, or 
carried in ships, (the building of which had occupied 
many men for manj months,) to the ports of New 
York, Boston or Liverpool; Avhere depots, piers, 
docks and warehouses had been laboriously con- 
structed for the reception of the cars and ships and 
for the storage of the wool, until tlie manufacturer 
was ready to receive it. 

5. To the manufacturer the wool was carried over 
a road which crosses broad and deep rivers, spans 
valleys, bores through mountains, and costs in 
building the labor of many times more men for 
many times more months than did the building of 
the ship. 



2^3 COMMON SENSE; OR, 

6. Ha^^ng reached the factory, the changes the 
wool has to undergo to fit it as a covermg for the 
feet may now be said to commence. 

7. First ii is picked and cleaned, then carded in 
a machine which was produced by great labor on 
the part of many laborers, driven by an engine, also 
tlte product of much labor and skill, while fuel has 
been dug out of the earth or cut down from forests, 
and laboriously transported to the engine, in order 
that this latter may drive the carding machine. 

3. The wool is then spun on a spinning machine, 
driven by an engine which is fed by fuel, all the jpro- 
ducts of. great labor and skill. 

9. The wool is now converted into a thread to 
which the name of yam is given, and this yarn is 
next dyed and then woven on a loom or knitted into 
a stocking. 

10. The stocking is now transported to the v/are- 
house of the wholesale dealer, and by him distribut- 
ed over the country amongst the storekeepers, so 
that these may have at hand a supply to meet the 
demand of the parents of the children by whom the 
stockings are to be worn. 

11. In a like manner may be traced the history of 
all other articles of clothing ; pants, shii'ts, di-awei's, 
dresses, Jackets, boots, shoes and hats. 



FIRST STEPS IN POLITICAL ECONOMY. \% 

12. So, too, all articles of food ; milk, bread, meat, 
tea, coflee, sugar, spices and condiments, may in a 
like manner be traced from the commencement of 
the labor of their production until they appear 
upon the table. 

13. I*roducts of Lctbor. — ^It Tv^ill be seen that 
none of them can be produced except by the expendi- 
ture of vast amounts of lahor. 

Houses for shelter, school houses as places of in- 
struction, factories for the manufacture of tools, 
machinery, clothing and furniture, graneries and 
warehouses for storage, roads and raihoads, canals, 
cars and ships, for the distribution of commodities 
among manufacturers, traders and consumers, as 
well as the stores in which they are kept until 
needed to be eaten, worn or used, all cost great 
labor for their construction and maintenance. 

All these things above enumerated, and many be- 
sides, which we call the necessaries and comforts of 
life, AKE PEODUCED BY LABOE, and Can only be so 
produced. 

14. Wealths — We have now acquired an im- 
portant thought, viz.: that the necessaries and com- 
forts of hfe are produced by labor, and to the 
things thus produced the name of wealth has been 
siven. 



20 COMMON SENSE; OR, 

15. It is essential to the right understanding of 
any subject that the learner should have a clear and 
definite notion of the meaning of the language em- 
ployed in its discussion. 

16. This necessity is nowhere greater than in the 
study of the conditions of human well being ; let the 
pupil therefore clearly understand that by the term 
wealth is meant the necessaries and comforts of 
life produced by labor, and that to the idea of the 
necessaries and comforts of hfe produced by labor 
the name wealth and no other will be applied. 

17. We shall find by and bye that wealth exists 
imder difi'erent conditions, or is applied to various 
uses ; we shall hereafter analyze wealth, i. e., di-vdde 
it into its component parts, and we shall give a 
special name to any portion of wealth of which we 
may need to speak without including any other. 



FIBST STEPS m POLITICAL ECONOMY. 21 



CHAPTER II. 

Some necessaries not produced by labor and not included 

IN THE TERM WEALTH. EarTH, AIR, WATER, WHEN THEY ARE 
not, and WHEN THEY ARE WEALTH. PRODUCTION ; WHAT IT 

IS. Labor creates nothing. It changes the position of 

MATTER. We live ON THE PRODUCTS OF PAST LABOR. IDEAS 
OF ECONOMY. SKILL AND KNOWLEDGE EVOLVED, AND NAMES 
GIVEN. 

18. Some necessaries not wealth. — ^We liave 
seen that most of the necessaries and comforts of 
life are produced by labor, to these the name of 
■WEALTH has been applied ; but there are some neces- 
saries which are not produced by labor ; such are the 
earth, air and water. 

19. But, although the earth, air and water, in 
their natural places and conditions, do not come 
within our definition of wealth, (for, though necessa- 
ries of life, they are not produced by labor,) there 
are circumstances under which they come within 
our definition. 

20. In coal mines, in the diving-bell, m xne oriv- 
ing of tunnels, fresh air is supphed to the miner, to 
the diver and to the excavator, at the cost of con- 
siderable labor, and the cost of supplying it in 
these cases enters largely into the cost of producing 



22 COMMOX SENSE; OE, 

the coal, building the pier, clock or bridge, and in 
cutting the tunnel. 

The water we need for di'inking, cleansing, cook- 
ing, or other purposes, is generally brought mtli no 
little labor to- the place where we use it. 

The earth must be cultivated and improved before 
it will give its fruits in abundance. In all these 
cases air, water and earth are wealth, because they 
are produced in the place where, or m the condi- 
tion in which they are required by labor. 

21. The justice of including these Avithin our de- 
finition will become manifest when we examine a 
little closely what man's labor really does towards 
the production of food, clothing, fuel, shelter, and 
other articles of use or enjoj^ment. 

22, What labor does. — Labor creates nothing. 
It can only change the relative positions of parti- 
cles of matter. 

In ploughing, man breaks up the soil and exposes 
it to the action of the air. To mamu'e it he trans- 
ports matter containing fertilizing particles from a 
place where these particles are in excess, and spreads 
the matter upon his field where they are deficient. 
He sows the seed — that is, he deposits another 
form of matter in the ground thus improved, and if 
he has ploughed and manured his field, and selected 



FIRST STEPS LY POLITICAL ECONOMY. 23 

and sown, the seed witli due regard to climate, soil, 
and nature of tlie plant, and continues diligently to 
weed, and, wliere necessary, to irrigate his land, lie 
has reason, from past experience, to expect to garner 
a bounteous harvest. 

The corn, wheat, or other grain which is the pro- 
duct of the labor of the farmer, is ground into meal 
or flour, and then made into bread by mixing with 
it, salt, water and yeast Imeaded together, and baked 
in an oven. No new or additional element or atom 
of matter is brought into existence, but, by a change 
in the relative positions of particles of matter, a 
combination is produced to which the name bread 
is given ; and which, in this new form, is well 
adapted to satisfy man's needs. 

In the process of spinning, weavmg, knitting, dye- 
ing, cutting and fitting, building, mining and forg- 
ing, nothing is created ; the positions of particles 
of matter are shifted, and this is all. 

23. "When this new arrangement of matter tends 
to satisfy some want, a commodity is produced by 
labor ; and this commodity therefore belongs to- 
that class of things to which the general name 
WEALTH has been given. 

24» The character of the people hy whom 
existing wealth has been produced. — The 



24 COMMON SENSE; OR, 

people by whom the wealth we now find in existence 
was produced must, we see, have been a hard- 
working people. The old, the infirm, and young 
children are incapable of labor. Their means of 
subsistance must be provided for them by those 
who can and do labor. The smaller the number of 
those who live upon the labor of others, the greater 
will be the amount of the necessaries and comforts 
of life produced for the enjoyment of all. So also 
will the means for such enjoyment increase with the 
ability and willingness of those who do labor. 

25. This abihty and willingness can be acquired 
by the young by earnest attention to their school 
duties, and by cheerfully assisting their parents in 
household or other tasks adapted to their strength. 

26. Industry. — To those who labor cheerfully 
and continuously in the production of wealth, or in 
fitting themselves to become producers, the term 
" industrious " is applied, and the quaUty they pos- 
sess is termed " industry." 

27. The quality of industry must have belonged in a 
high degree to the men and women of the past, 
since we now enjoy so much wealth which they had 
accumulated and provided for our use. Children 
who think of this will readily learn to love and 
practice industry, in order that, when they shall be 



• FIBST STUPS IN POLITICAL ECONOMY. 25 

grown up to be men and women, and take part in 
the business of production, they may cheerfully, 
willingly and continuously labor to replace the 
stores consumed by them in infancy and childhood, 
to provide for their then present and -future wants, 
as well as to bear their share of the burthen of sup- 
porting those who shall have succeeded to their 
places in the ranks of non-workers. , 

28. In passing in review the manner in which are 
produced some of the commodities in common use, 
the question must have suggested itself to the mind 
of the thoughtful student — what were men living upon 
while digging and ploughing, sowing and reaping, 
rearing cattle, building, spinning, baking and the 
like? 

29. We live on the products of past labor, 
— ^The wealth which man's labor is engaged in pro- 
ducing cannot be employed to satisfy his present 
needs, the results of that labor do not exist in the 
present, but are expected to exist at some future 
time. Evidently, then, man lives on the products of 
Ms labor in tJie past, the saving of which for future 
consumption was a necessity soon forced, upon his 
notice. 

30. In nothing is the contrast more distinctly 
marked between the savage and the civilized man, 

2 



26 COMMON SENSE; OR, 

than in the forethought wliich renders it part of the 
present enjoyment of the latter to provide for the 
future wants of himself and family. Thus, the very 
act of abstaiuhig from the complete gi-atification of 
his and their present needs, in order that their futui'e 
wants may be supphed, forms a part of the happi- 
ness of the civiHzed man ; while nothing could cause 
him greater mental suffering, than to be compelled 
to consume all his present store, with the prospect 
of being unable to obtain a futiu'e suppl}'. 

31. The salvage, on the contrary, cannot be in- 
duced .to abstain from wasting what he cannot im- 
mediately enjo3% however terrible may have been 
the sufferings of himself and family through past 
wastefulness. 

32. Saving. — The necessity of saving ^vdll be, 
perhaps, more vividly realized by the yoimg by 
noting the following facts : 

33. In most covmtries there is but one principal 
harvest in the year ; but man's need for food occurs 
three or four times every day, neither Sundays nor 
holidays being excepted. How, then, can he make 
one harvest gratify the cravings of three times three 
hundred and sixty-five appetites, but by saving? 
But, further, harvests sometimes fail, or are late, or 
deficient, and the abundance of one year must. 



FIBST STEPS m POLITICAL ECONOMY. 27 

therefore, be stored up to supply tlie failure, lateness, 
or deficiency of tlie next. Savages are incapable of 
looking so far forward into the future, and hence 
their tribes are being continually decimated by 
famine and its sure successors pestilence and dis- 
ease. 

34. It is impossible fully to appreciate the very large 
amount of saving from the products of past labor 
which must have been practised by those who have 
lived before us, in order that we might procure 
merely the common things in use in the abundance 
in which we have them. 

35. Among other things it is to be observed that 
the aqueducts which bring water to our houses — the 
ships, docks, piers, canals, railroads, wagons and 
steam cars employed in the transportation of com- 
modities ; the machinery employed in the conver- 
sion of raw products into articles of utility — could 
never have had existence but for such saving. Their 
very cost measures, and is measured, hy the quantity of 
saving from the products of previous lahor consumed in 
their construction. 

36. JScofiomy. — The name "economy" is ap- 
phed to the quality of saving, and this quahty we 
now see must have largely prevailed among parents 
in order that the children of to-day might enjoy the 
large supply of comfort provided for them. 



28 COMMON' SENSE; OR, 

37. High among the industrial virtues must the 
quality of economy be ranked, and its prevalence 
must be classed as one of the most important con- 
ditions of human well-being. 

38. The habit of saving once acquired, its prac- 
tice becomes part of the enjoyment of the present ; 
and when youth shall be generally taught to per- 
ceive its importance, a vast increase in the well- 
being of future generations may be confidently 
predicted. 

39. The industry and economy we have seen 
practised in the past, and which it is desirable 
should to a yet greater degi'ee be practised in the 
future, would have availed little to produce an 
abundance of wealth, if man's faculties were incapa- 
ble of improvement, or if the ease with which he 
performs his labor, and the character of its results, 
were not increased and improved by each repetition ; 
or if he were unable to store up and record his obser- 
vations for future use. 

40. Skill. — The faculty of performing any cer- 
tain labor with ease, and of giving an improved 
character to the results of that labor, is termed 
" Skill." 

SI, Knoivledge.—Ho liave or possess stored up 
in the mind, ready for use, observations of past facts, 



FIRST STEPS m POLITICAL ECONOMY. 29 

and the ' records of past experience, is termed — 
"Knowledge." 

42. Skill and knowledge are also needed to ob- 
serve and record facts, and a knowledge of those 
facts and of their mutual relations is needed to dis- 
cover the laws of their modes of action. From ob- 
servations of these facts and modes of action, the 
principle of the rotation of crops, the nature, quali- 
ties and application of manures, the effects of steam 
and electricity wer^ discovered and subjected to 
man's purposes. 

43. Skill is needed to manufacture the tools and 
implements in daily, even those in household, use, as 
weU as the more complex machinery employed in 
manufacturing them. 

44. The tools, once produced, skill is required in 
their use. The bow and arrow, and the rifle, are 
equally useless in the hands of a man who has no 
skill to use them. The civilized man, armed with a 
rifle which he did not know how to use, would be no 
match for the savage, armed with bow and arrow, 
who had practised shooting at a mark. 

45. Industey, Economy, KjsrowLEDGE aiid Skill are 
now seen to be essential to the production of any 
considerable quantity of the necessaries and com- 
forts of life. Their prevalence is a condition of hu- 



30 COMMON SENSE; OB, 

man -well-being. On tlie degree in wHich they 
prevail will, in a great measure, depend the happi- 
ness of e"very community. The progress and future 
' happiness of every people must depend on the care 
■with which these quahties are sought to be imparted 
to the young. With what earnestness, then, should 
not the boys and girls, for whose improvement in 
these qualities efforts are being made by their par- 
ents and teachers, strive to attain knowledge, and to 
acquire habits of industry, economy and skill ! 



CHAPTER III. 

Division of labor. Increased efficiency resulting from. 
Co-operation. Household labors. Training of the 
YOUNG. Special fitness of women for certain labors. 

46, Division of Lahor. — In the early stages of 
society, whatever object is desired by any of its 
members is produced directly by himself ; that is to 
say, (violence and fraud excepted,) by the direction 
of his own labor to the immediate production of 
the object desired. But the time of the workman is 
greatly taken up, and his attention distracted by 



HIRST STEPS IJSi POLITICAL ECONOMY. 31 

going froili one kind of labor to another, and little 
skill can be acquired in any. It soon came to be 
perceived that by each laborer applying himself to 
one class of production exclusively, the total product 
would be vfery much increased ; and each laborer 
can so apply liimseK without anxiety or hesitation, 
when, seeing others do likewise, he knows he can 
readily procure the other things he needs by exchang- 
ing for them the direct products of his own labor. 

The canoe of the savage, built by the unassisted 
labor of himself and family, has to be made in inter- 
vals between hunting and fishing ; but when society 
has so far advanced that one portion of its members 
will find sufficient food for the rest, whereby these 
others are enabled to devote themselves exclusively 
to the building of ships, the rude canoe becomes im- 
proved into the sailing vessel with masts and sails, 
and the sailing vessel in her turn yields to that 
triumph of American skill and ingenuity, the steam- 
ship, or ship propelled by steam. "What wonderful 
skill is expended in the construction of an ocean 
steamer ! How marvellously the shipbuilder co- 
operates with the farmer in the production of grain ; 
with the tailor, in the production of clothes ; and 
with the potter and cutler, in the production of their 
wares ! 



32 COMMON SENSE; OR. 

The separation of the occupations of men, so that 
each laborer applies himself exclusively to one kind 
of labor, is termed " Division of labob." 

47, Resulting ificrease in efficiency of 
labor. — But for it, the acquirement of the knowl- 
edge and skill needed for the invention and con- 
struction of the steam-engine, of telegraphs, nay, 
even of comfortable dwellings or clothes, would have 
been impossible. 

Tlie addition made, by the adoption of the divi- 
sion of labor, to the production of man's labor, is 
doubtless greatest in those industrial occupations 
which have for their object to supply the more press- 
ing needs of the community ; but its advantages can 
perhaps be more vividly realized by observing the 
process of the manufacture of some more trifling 
Idnd, such as the illustration given by Adam Smith, 
in his ""Wealth of Nations." "A workman," says 
Adam Smith, " not educated to the trade" (pinmak- 
ing,) " will with difficulty make a dozen pins a day ; 
" but not only is pinmaking a special business, it is 
" also divided into branches, each of which is a trade 
" by itself. One man draws the wire, a second 
" straightens it, a third cuts, and a fourth points it ; 
" a fifth grinds the tops to receive the head, while 
" the making of the head is divided into several 



FIRST STEPS IN POLITICAL ECONOMY 33 

" trades ; another workman puts on tlie head ; and 
" to whiten the pins, and even to place or stick them 
" on papers, is each a separate trade." 

The manufactory examined by Adam Smith is 
described by him as having been very poor, employ- 
ing but ten hands, and furnished with indifferent 
machinery, and yet they could turn out 12 lbs. of 
pins per day. Four thousand medium-sized pins go 
to the lb,, maldng 48,000 pins as the day's work of 
ten men, whose united product, unaided by division 
of labor and co-operation, would not exceed 120 pins 
a day ! 

By the improved machinery of the present day — 
results of the still greater division of labor and 
more intimate and trustworthy co-operation now in 
use — the same number of men can now turn out 
over one million of pins a day. 

48. In other arts and manufactures the results of 
the division of labor are not less striking. 

Pin-makers, spinners, weavers, tailors, shoe-mak- 
ers, architects, lawyers, builders, and engineers, not 
one whit less than the farmers, all co-operate to 
provide wholesome and palatable food, comfortable 
clothing, and abundant fuel and shelter for all. 
Each co-operates in the labor of every other indus- 
trial worker ; and the lessons of economv shown in 



34 COMMON SENSE; OR, 

the last chapter receive additional enforcement from 
the observation of the fact, that all these laborers 
are living wliile they labor, on the products of past 
labor. How enormous, then, must have been the 
amount of saving which has been going on in the 
past, and which is essential m the present and for 
the future ! 

There is one class of labor on which it is desira- 
ble to devote some attention, because its importance 
and position in the economy of industrial life are 
frequently overlooked. 

49, Household labors. — The household labors, 
generally performed by females, are no whit less 
honorable, essential, or productive than any labor 
performed by man. If these labors were not per- 
formed for the men, they would have to do them for 
themselves, and, from want of experience, they 
would neither be done so well nor so quickly as 
they are now. The labors, too, now performed by 
men would be constantly interrupted, and, conse- 
quently, be less skilfully performed, and their labor 
be less productive than at present. 

Hence domestic workers, whether men or women, 
co-operate in the buHduig of bridges, railroads, 
ships, and, in short in the production of all commodi- 
ties whatever. 



FIBST STEPS IN POLITICAL ECONOMY. 35 

50. The training of the young is a class of labor 
which nature has specially pointed out as best per- 
formed by women, and there is httle doubt but that 
the special fitness of women for training the young, 
requiring woman's constant presence in the home, 
has caused the chief portion of domestic labor to 
continue, even in civihzed communities, to fall to 
her lot. 

51. In our country this special fitness of women 
to train the young has received a further develop- 
ment. 

52. The high and noble vocation of the teacher 
is chiefly filled by women among us. They carry 
into the school the quahties and faculties which 
especially adapt that sex for the training of the 
young; and they are undoubtedly better able to 
understand the wants and feelings of children than 
less sympathizing man. 



36 COMMON SENSE; OR, 



CHAPTEB lY. 

Interchange. Necessity of considering and satisfying the 

WANTS OF others. 

53. Interchange. — The adoption of tlie division 
of labor tlirows a new duty on the laborer. He has 
no longer to consider what he himself needs in 
order to supply his wants, but he must ascertain 
what things are most desired by other producers. 

54. Having ascertained this, he baows that other 
producers will be as anxious to exchange their pro- 
ducts for his as he will be to acquire theirs, and he 
can devote his whole skill and energy to the pro- 
duction of his one commodity. 

55. The quantity of the commodities he needs, 
which he will be able to procure, (skill, industry and 
economy being supposed equal,) will be propor- 
tioned to the judgment he has exercised in supply- 
ing the wants of others. 

56. Harnioni/ of Industries. — The beautiful 
harmony of industries which here comes in view 
deserves our especial consideration. 

A man's own happiness is his only motive to 
action, that is to say, the gratification of some one 



FISBT SETPS IN POLITICAL ECONOMY, 37 

or more of Ms faculties is wliat induces man to act. 
Even wlien moved to action by sympathy for others, 
as, for instance, for members of his own family, it 
is still to gratify his own sympathetic organs or facul- 
ties that he acts, as these organs would be pained 
did he not do so. He balances, (unconsciously in 
most cases,) the pain of the labor he gives himself 
to do good to those dear to him, against the pain he 
would suffer if he failed to do so, and finding the 
latter would be greater than the former, gratifies 
himseH by performing the act wliich is to make 
another happy. This is a fact, nay, a truism, which 
folly and ignorance may deplore, but which knowl- 
edge observes to be as much a part of man's nature 
and as necessary to the preservation of the species 
as are his appetites. 

57. For if man were not guided by the desire for 
his own happiness, to gratify his own desires, but 
each man's actions were dictated by what he con- 
ceived to be the wants of another, instead of men 
eating when hungry and laboring to avoid starva- 
tion, endeavoring to avoid being frozen by cold or 
burnt by fire, they would perish for want of food, or 
fi'om cold, or fire, while awaiting the provision or 
salvation to be provided them by another, and the 



38 COMMON SENSE; OR, 

entire numan race would soon disappear from the 
earth. 

58. The desire we have to procure for ourselves 
• and those dear to us as large a supply as possible of 
the necessaries and comforts of Hfe, can be gratified 
only by suppl^dng the wants of others, thus blending 
in a common bond the interests of all, and making 
the welfare of each industrial worker identical with 
that of the community in which he labors. 



CHAPTEE V. 

Protection to life and property. Honesty. Small effi- 
ciency OF GOVERNMENTS. CONSCIENCE THE MOST EFFICIENT 

POLICE. Effects of dishonesty. Demoralizing influence 
OF uccessful dishonesty. 

SO, Protection. — "We have seen that the means 
of subsistence and of enjoyment can only be pro- 
cured by labor, and that industry, knowledge, skill 
and economy are essential to their production and 
preservation. But man devotes himself to labor to 
satisfy his needs, and having j)roduced, he must be 
permitted to enjoy ; otherwise he would soon grow 



WEST STEPS IN POLTTIGAL ECONOMY. 39 

tired of his useless toil, and, production ceasing, the 
world would be filled with misery. Famine and pes- 
tilence would soon sweep from the earth a race 
which failed to insure to industry the property it 
had acquired by labor. 

60. To secure to the laborer the enjoyment of. 
what he has produced by his labor is, then, one of 
the earhest efforts of society emerging from barbar- 
ism. Protection to property must he secured, or the 
inducement to labor is diminished, and that to save 
and husband is destroyed. But beyond perceiving 
the necessity of establishing security for property, 
man has yet made httle progress ; the most civilized 
societies are yet groping in doubt and uncertainty as 
to the means best adapted for the attainment of this 
end. 

Glo Honesty, — "Were all men so organized and 
so taught and trained in youth, that to seek to ob- 
tain possessio-n of the products of another's labor 
save in exchange for that of their own, should be re- 
volting to their own minds, the difficulty would cease 
to exist. 

62. Unhappily, some there are who, from defec- 
tive training or organization, seek to obtain the pro- 
ducts of labor by other means than working and 
saving — viz., by violence or fraud ; and from their 



40 COMMON SENSE ^ OB, 

efforts it is gi-eatly to be desired that the workers 
should be protected. 

"With this object in view, governnients have been 
established, police and courts of justice have been 
organized, and for the support of those serving in 
these offices, Taxes are levied and collected. 

63. But taxes can be gotten only from the earn- 
ings of the industrious and saving, and even if the 
functions of police and magistrates were performed 
to perfection, the reward and consequent induce- 
ment to the industrious and saving, to labor and to 
save, must be dimiaished by the amount taken from 
them in taxes to pay the labors of magistrates and 
police. 

64. Unhappily, we are here met by a still graver 
difficulty ; not only are the functions ascribed to 
pohce and magistrates not performed to perfection, 
but in the most advanced societies yet established, 
the system of laws and of justice are so imperfect, 
that it is a grave question whether the benefits se- 
cured by magistrates and police are adequate to the 
cost of maintaining them. 

65. Conscience the most effective police, 
— ^Whatever means may, as civilization progresses, 
be finally accepted as best adapted to afford secur- 
ity for property, one thing at least is clear : the 



FIRST STEPS IN POLITICAL ECONOMY. 4I 

larger the number of those who adopt violence or 
iraud as a means to procure wealth, the larger needs 
to be the force employed to resist them, the greater 
the cost of maintaining such force, and the greater 
the risk, always great, of finding the protective force 
itself invaded by the presence, in its own bosom, of 
the violent or fraudulent. No police nor magistrate 
can he so constant, vigilant, or efficient as that which the 
well-trained citizen carries alivays about with him — viz., 
his own conscience. 

Hence the only means which can, in our present 
state of civilization, be reUed on as certain to add to 
the security of property, are individual character and 
self-control, to be secured only by good teaching and 
training in youth. 

66. Although the necessity for honesty has been 
evolved in our investigation, posteriorly in scientific 
order to industry, skill and economy, none of the 
last-named quahties can ever flourish in the absence 
of respect for property; while, as the natural in- 
stinct of man is to taTce what he sees and desires 
until he learns the evil consequences of so doing, the 
exercise of this quality of honesty needs to be ear- 
liest taught. It needs training and experience for 
youth to learn the many forms under which honesty 
should be exercised, until it grows into a habit of 



42 C03niON SENSE ; OR, 

mind, a part of liis nature, a permanent quality of 
character. 

The advantages derivable from a division of labor 
would be wholly lost to us in the absence of trust- 
worthiness and truthfulness. Some amount of these 
quahties is absolutely indispensable for the adoption 
of the division of labor at all ; its full benefits can 
never be realized while falsehood, or any species of 
fraud or untrustworthiness prevails among us. 

67. It is not alone by diminishing the inducement 
to labor and economy that society is injured hj the 
practices of the dishonest. In all civihzed coun- 
tries, while the industrious and saving are consum- 
ing, they are, as we have seen, replacing, not only 
what they consume, but what is consumed by the 
sick, the maimed, and the incapable ; and, in addi- 
tion, are increasing the store of wealth of the com- 
munity year by year. 

The dishonest, the rogues, the cheats and thieves 
who plague society, also consume, and that without 
replacing what they consume ; they also frequently 
destroy as much as they enjoy. 

68. If society submitted without resistance to the 
depredations of the dishonest, it would fall back into 
misery and barbarism, so that there would be little 
left for the thieves to steal ; it is therefore best, even 



FIRST STEPS m POLITICAL ECONOMY. 43 

for tlie subsistence of the tliief himself, that his ef- 
forts should be resisted, and himself restramed from 
his evil courses. But while endeavoring to secure 
the rights of property, we must be careful not to ex- 
aggerate the capabilities of the best of governments. 

69. Government can strive to provide security for 
wealth, hut it cannot create it. 

70. Wealth is the product of industr}^, skill, know- 
ledge and economy. In so far as governments suc- 
ceed in affording security for life, liberty and prop- 
erty, in so far it promotes these virtues ; but the 
fundamental qualities of civihzed man can be secured 
only by good teaching and training in youth, the 
most important part whereof is the home influence 
of the parents. If, then, the parents possess these 
virtues, we may hope to see them reproduced in a 
yet greater degree in their children; and as the 
seeds of these qualities must be sown in infancy, it 
is in infancy we must begin the training to make 
good parents. 

71. Danorali^ing influence on the wit- 
nesses of dishonest examples. — Besides the di- 
rect discouragement to industry occasioned by dis- 
honesty, it has yet another influence which, though 
indirect, is far more pernicious than its direct influ- ■ 
ence. This indirect influence consists in the demo- 



44: COMMON SENSE; OR, 

ralization which it occasions in the minds of those 
who perceive crime enjoying that success which 
should only be the reward of industry, skill and 
trustworthiness. 

72. Let us carefully guard ourselves against yield- 
ing approval or respect in any form to wrong-doing, 
no matter how successful or powerful it may be, but, 
on the contrary, let it receive at all tunes our un- 
qualified scorn, and a hatred proportioned to its suc- 
cess. 



CHAPTER VI. 

The young not possessed of wealth. Their wants supplied. 
Sale and purchase of labor. Sellers of labor and not 
the wealth possessors have the enjoyment of the por. 
tion of the latter's wealth employed in production. 
Wages. Capital. Interest. Average wages determined 

BY productiveness. INDIVIDUAL WAGES; HOW DETERMINED 

73. As a rule, the young are not possessed of 
wealth ; yet their wants are regularly supplied. 
Some parents, it is true, owing in most cases to de- 
fective teaching and training in their youth, lare not 
so able or wilhng as others to supply their children's 



FIB8T STEPS m POLITICAL ECONOMY. 45 

needs. By giving the young such education as shall 
render them self-supporting, and shall hinder them 
from undertaking the parental duties until they have 
made provision for the maintenance of a family, the 
number of incapable or unwilling parents will be di- 
minished in the future. Children whose misfortime 
it is to be neglected by their parents, generally suffer 
through life the consequences of such neglect, though 
their sufferings are often mitigated in childhood by 
the charity of society or of individuals. 

74. But though the wealth-possessors may be wil- 
ling to part with a portion of their wealth for the 
relief of destitute children, as also of incapable or 
disabled adults, they are not willing to give of their 
wealth to adults who are neither incapable nor dis- 
abled, except in return for some services rendered or 
to be rendered by the latter. ^ 

75. Sale and inireliase of labor, — ^Happily a 
means exists by which they who have no wealth 
saved up for their immediate wants can induce the 
wealth possessors to part cheerfully with theirs. 
The former can sell their labor to the latter : i. e., 
give the wealth possessors the right to the future 
product of their present labor, in exchange for the 
present wealth of which they stand in need. This 
can be done because most of the wealth-possessors 
are anxious to increa,se their wealth. 



46 COMMON SENSE; OR, 

76*. How the tvealtMsss have tJie enjoyftieiit 
of the wealth of its jjossessors. — The wealtli- 
possessors might choose to retain their wealth for 
their own consumption. In parting 'with it to la- 
borers, thej allow the latter to consume it in their 
stead. The laborers, then, and not the wealth-pos- 
sessors, have the enjoyment of the wealth the latter 
employ in the purchase of labor, and the wealth- 
possessors cheerfully part with theii- wealth in the 
hope that the jjroducts of the labor they purchase 
will replace the wealth they have bestowed upon the 
laborer, ^viih an increase thereto. 

77, Wages and Capital. — The price of the la- 
bor purchased by the wealth possessor is termed 
Wages ; the portion of wealth employed or destined 
to be employed in the production of fresh wealth is 
termed Capital, and the owners thereof Capitalists. 
The wealth employed in the payment of wages, is 
obviously a part of capital. 

78. Many persons are both capitalists and labor- 
ers. He who possesses skill as a workman, and who 
in the course of years of industry, and of saving, has 
made a provision for himself and family, may yet 
lack the talent successfully to administer his capi- 
tal, and conscious of his incapacity, may prefer to 
lend it to other more capable administrators, (as by 



FIBST STEPS liY POLITICAL ECONOMY. 47 

depositing it in a savings bank,) in return for a fixed 
payment, to be made at stated intervals, by the lat- 
ter. 

This sum, sucli administrators agree to pay, lioping 
to do so out of tbe profits they may earn from ad- 
miaistering sucb borrowed capital. 

79* Interest. — This fixed payment is called In- 

TEEEST. 

The laws of nature by which its amount is fixed, 
will be hereafter investigated. 

80. Again the capitalist-laborer may become a 
stockholder in some joint stock company, sharing in 
the risk, but not in the labor of administration, 
while continuing to sell his own labor for wages as 
theretofore. 

81. As abeady intimated, the wages paid by the 
capitalist do not comprise the whole of that portion 
of wealth which is employed or destined to be em- 
ployed productively. The various tools and aids to 
industry, plant and machinery, ships, docks, rail- 
roads, flax, cotton, wool, hides, etc., produced by la- 
bor, and destined to be employed in further produc- 
tion, are also capital, and it is because it is desired 
to consider phenomena common to all. those por- 
tions of v/ealth which are destined for employment 
in the production of wealth, that the things embraced 



48 COMMON SENSE; OR. 

in tliat idea, are classed together in a common 
name, viz : Capital. 

82, Average Wages. — Wages are paid out of 
existing capital ; but it is the average productiveness 
of labor, which ultimately determines the average 
rate of wages. If we suppose the supply of capital 
in any particular trade to have become small, com- 
pared with the number of highly skilled laborers, 
the wages paid to each laborer must be small also. 
But the unusual profit attending capital employed 
in that trade would speedily attract to it capital 
from other trades and countries, and a higher rate 
of wages would be paid, until the efficiency of the 
laborer would be fully remunerated. Hence it is tJie 
productiveness of labor, in any given community, 
which ultimately determines the average rate of 
wages. 

83. In Mr. Brassey's work, entitled . "Work and 
Wages Practically Illustrated," evidence will be 
found, showing this law to hold good, not only be- 
tween rates of wages in any one community, but 
even as between different communities. 

Notwithstanding the great and striking diversities 
in the rates of wages in different communities, the 
cost of a given amoiuit of the products of labor is 
everywhere about the same ! As a result, Mr. Bras- 



MBST STEPS m POLITICAL ECONOMY. 49 

sey found that in Italy, Moldavia, or in India, any 
piece of engineering work could be constructed as 
cheaply by English as by native laborers — ^that is to 
say, that notwithstanding the higher rates of wages 
paid to British laborers, the greater efficiency of 
their labor rendered it equally profitable to employ 
them as to employ the natives. 

This result, so totally at variance with popular 
notions upon the subject, is precisely what was pre- 
dicated by the scientific observer; and Since the 
inferior laborers have to provide subsistence for 
themselves and those dependent upon them out 
of their wages no less than the more efficient la- 
borer, it is obvious how greatly an increase in the 
efficiency of the laborers must promote tlieir. well- 
being. 

84. Individual wages, — ^We have now to con- 
sider what causes determine the rate of individual 
wages, and the operation of those causes. 

The laborer desires to sell his labor to the best 
advantage ; the purchaser desires to secure the great- 
est amount of future products in return for his pres- 
ent outlay. Hence he will seek for the industrious 
and skilful laborer in preference to the slothful or 
ignorant, the honest to the dishonest, the careful, 
trustworthy and sober to the careless, unpunctual 



50 COMMON SENSE; OR, 

/ 

and drunken. The unhappy beings Avho are subject 
to the infirmities of dishonesty, idleness, ignorance, 
carelessness or drunkenness, either will get no em- 
ployment, or, at best, must sell their labor at a lower 
rate than their better disposed and better trained 
comrades, because the capitalist can only afford to 
purchase their labor at a rate of wages such as shall 
enable him to employ more than ordinarily efficient 
foremen to prevent or con-ect the mischiefs which 
the misconduct of the ill-trained laborers might 
otherwise occasion. 

He must also himself be compensated for the ad- 
ditional anxiety and labor the employment of such 
workmen occasion him, as well as the risk incurred, 
amounting to an actual percentage of loss, which the 
diligence of himself and superintendent ^dll fail to 
avert. 

85. The application of these principles to daily 
life is not difficult. Clearly, they who do most work 
must, when paid by the piece, receive most wages ; 
when paid by the day, those who work the greater 
number of days will receive more in a year than they 
who work fewer. The former, becoming known as 
reliable and punctual workmen, and year by year 
acquiring greater slcill in consequence of unintermit- 
ted labor, gain a character which causes them to be 



FIRST STUPS I.V POLITICAL ECONOMY. 5^ 

sought after by capitalists, and so insure to them- 
selves more constant employment or a higher rate 
of wages, and generally both combined. 

Neither does the additional share the better con- 
ducted laborers receive leave a smaller amount for 
distribution among the less well-conducted. 

"While establishing the character which enables 
the well-conducted laborer to command a rate of 
wages above the average, he was temporarily receiv- 
ing less, in proportion to the productiveness of his 
labor, than his fellow-workman. He consequently 
yielded a larger return to the capitahst than they, 
and thus added to the fund from which wages are 
paid, which, at the time he receives his enhanced 
wages, is greater than it would have been by reason 
of his former conduct ; and he now only draws a 
portion of that addition which the superior produc- 
tiA^eness of his past labor has added to it, the residue 
being distributed by capitalists among other la- 
borers. 

86. Neither is tliis the only advantage to the less 
fortunate laborers. Placed under the watchful eyes 
of trustworthy overlookers, opportunity is given 
them to acquire that skill and industry in which 
they are deficient, wliile the difference between then- 
wages and that of the better conducted workmen, 



52 COMMON SENSE; OR, 

affords them an inducement to grow out of bad hab- 
its into good ones. 

87, Ho IV wages nuiy be hieveased, — Im- 
provement, then, in the conduct of laborers is the most 
powerful means hy tvhich the proditctiveness of labor, 
and consequently its remuneration, can be increased. 

88, Wages proportioned to conduct, — ^We 
thus perceive, that other things being equal, the wages 
earned by individual laborers is proportioned to their 
conduct, furnishing another instance of that harmony 
of nature whose action, when uninterrupted by man's 
ignorance, tends to encourage and develop those 
qualities which most conduce to human well-being. 

89, Circumstances affecting tvages in dif- 
ferent trades, — There are yet other considera- 
tions which affect the rates of wages of different 
occupations. Some trades are easy, others severe, 
some healthy, others unhealthy, some safe, others 
dangerous, some constant, others intermittent, 

some attractive, and others repulsive. The prefer- 
ence which all laborers will give to the easy, healthy, 
safe, constant and attractive labor, can only be 
overcome by the offer of higher wages in the severe, 
unhealthy, dangerous, intermittent or repulsive. 
■ 90. In this favored country there are few trades 
in which diligence and economy will not secure a 



FIRST STEPS^IN POLITICAL ECONOMY. 53 

comfortable living to the workman, and at tlie least 
a tolerable competence for old age ; hence the choice 
of employment to which one about to commence iis 
industrial career should be directed, may generally 
be safely left to be determined by his tastes and ui- 
clinations. 

" But the selection of an employer is of great im- 
portance, and not more so on account of the influ- 
ence of the employer himseK than of the workmen 
he employs ; for as these will be probably for years 
the companion of the new-comer, the selection of an 
employer who endeavors to employ the best work- 
men should be the first thought of the parent or 
guardian whose child or ward is about entering on 
Ms industrial career. 

91. "Should circumstances arise whereby a good 
workman happens to be thrown into the employ- 
ment of a bad employer, the latter is not bound to 
stay beyond the term of service contracted for, and 
his leaving will be wise, provided he has a reasona- 
ble prospect of bettering his condition. This he may 
be enabled to do either by being invited by other 
employers, or by seeking them, or he may resolve to 
employ himself. 

"To be invited by other employers, he must have 
estabhshed a reputation for usefulness; to be sue- 



54 COMMON SENSE; OR, 

cessful in seeking better employment, lie must be 
able to offer evidence of work previously performed, 
while to employ himself lie must have acquired the 
qualifications necessary for the successful adminis- 
tration of capital, and must have saved from his past 
earnings the capital necessary for the subsistence of 
himself and the workmen he employs until the pro- 
duce of that labor can be realized in the market. "* 

92. It is thus clear that the workmen who suffer 
from insufficiency of wages should look to their own 
deficiency in one or more of the industrial virtues as 
the cause, and to correct such defects as the efficient 
means for attaining good wages. 

93. Especially is this true in countries so happily 
situated as our own. However unsatisfactory may 
be the present condition of any working man, a short 
period of probation and labor under the guidance of 
a skilled farmer will suffice for him to acquire the 
knowledge and skill necessary for successfully farm- 
ing a few acres of the unoccupied fertile land of this 
continent, and he can then betake himself to a call- 
ing where the return for his labor and capital will, 
if combined with thrift, soon place him in a position 
of secure and permanent well-being. 

* Quoted from memory from Ellis's "Phenomena of Social 
Life." 



FIRST STEPS IN POLITICAL ECONOMY. 55 



CHAPTER yn. 

Profit. Its uncertainty. Analysis of. Rates, how deter- 
mined. Capital the best friend of labor. 

94o Profit. — The owner of wealth is induced to 
employ his wealth as capital in the hope of thereby 
procuring an increase to his stock. 

The laborer, when he takes some of the savings 
of his past labor, and exchanges it, say for a spade, 
is a capitaHst to that extent, and makes the conver- 
sion in the expectation that he will thereby be able 
to earn more in the future ; that the spade will add 
to the productiveness of his future labor. The far- 
mer who purchases a plough, a barrow, a reaping or 
threshing machine, expects that the wealth thus ap- 
plied to the purpose of production will, before the 
implement be worn out, be returned to him with an 
increase. The purchaser of labor expects that the 
products of the labor, the right to which he has pur- 
chased, will replace to him the wealth paid for it, 
with an increase. The increase thus expected by 
the capitahst, whether upon his outlay for a spade, 
buildings, machinery, or wages, is, ivlien realized, 
termed peoitt ; it is the hope of profit which induces 



56 COMMON SENSE; OR, 

the owner of wealtli to employ it in production. But 
this hope may not be realized. The wages of the 
laborer are in hand and certain, but the profit of the 
employer is in the future and uncertain. He pays 
wages out of wealth he actually possesses. The wealth 
by which the wages thus advanced is to be replaced, 
as well as to yield the hoped-for profit, has yet to 
be produced. Crops sometimes fail, cattle may per- 
ish, fires destroy, or mistakes may sweep away the 
whole or a great part of the anticipated product of 
the labor for which present wealth has been expend- 
ed. The average of profit must therefore be suffi- 
cient to counterbalance these risks, or wealth wiU 
cease to be converted into capital. It must also 
give to the capitahst, as administrator, a remunera- 
tion equal to what he could earn by selling his labor. 

95, Analysis of profit. — Profit, then, may be 
resolved into three elements : 

(1.) Remuneration for the skill mid labor of the cap- 
tahst as administrator. 

(2.) Remuneration for the risk of loss he incurs as 
owner of the capital, or insurance. 

(3.) Remuneration for his having ahstained from 
consuming ; in other words, remuneration for the use 
of his capital, to which last the name of Inteeest 
has been appUed. 



FIBST STJEPS'IN POLITICAL ECONOMY. 57 

96. If now any particular calling offered, to tliose 
ejigaged in it, a larger profit, in proportion to tlie 
skill and labor necessary for its prosecution, to its 
attractiveness, and to the risks attending it, tlian 
other callings, other capitalists would seek to embark 
their capital in it, or those engaged in it would con- 
tinually increase their capital, until the rate of profit 
were reduced to something approaching uniformity. 

97. Qualifications of a Capitalist, — The 
most important quahfication for a successful cap- 
itahst, will be a combination of economy with an 
administrative capacity, such as shall enable him to 
direct the labor he purchases, so as to yield the 
largest profit ; "to select the most efficient laborers, 
and attract them to his service, by offering them 
the largest wages. 

98. Of the profit he makes through his judicious 
direction of the labor he has purchased, his econo- 
my teaches him to save the utmost, so that he may 
be able to earn a further profit, by adding it to his 
former capital, and employing the total as capital, 
by fresh purchases of labor. Punctual and trust- 
worthy in fulfilling his own engagements, he pos- 
sesses judgment to entrust only to punctual and 
trustworthy customers, and agents, the wealth he 
administers. He who possesses less discrimination 

3* 



58 COMMON SENSE; OR, 

of cliaracter, either in the selection of laborers a.nd 
the wages he pays, or in the direction he gives to 
their labor, or in the choice of his customers and 
agents, or is himseK wanting in economy, or trust- 
worthiness, receives a smaller retui'n upon the labor 
he directed, or is less saving of it when obtained. 
He therefore fails to increase the fund, out of which 
wages are paid, to the extent done by the capitahst 
who makes larger profit, and we thus perceive that 
the large?' the profits made by the capitalist the greater 
is the herwfit, not only to himself, hut, chief of all, to the 
laborer. Hence again, the laborer should strive to 
make his labor as productive as possible to his em- 
ployer, as the surest means of increasing his o^^^l 
wages. 

99. When to this consideration is added, the 
strengthening of those good habits in the laborer, 
on which we have seen his wages so much depend, 
as well as the earning a character for their posses- 
sion, the importance to the laborer of rendering his 
labor as productive as he can, cannot be over-esti- 
mated. Hence the interests of the capitalist, and 
of the laborer, are coincident. 

100. We sometimes hear capital spoken of as the 
enemy of labor. We now see it is its best friend. 
Capital in the hands of the capitalist, is far more 



FIRST STEPS IN POLmOAL ECONOMY. 59 

useful to tlie laborer, tlian to the owner. The latter 
enjoys the possible and probable, but by no means 
certam profit in the future, the laborers have the 
present use of tJue entire capital employed in the pur- 
chase of labor, while, to the owner, his capital is 
of use only as a provision against future need, to 
the laborer it furnishes the means of present subsis- 
tance, without which, he, and those dear to him 
must perish for want. 



CHAPTER YIII. 

Property in land. Rent. How regulated. 

101. Property in land. — In a previous chap- 
ter the right of property in the products of labor was 
found to be a law of nature, discovered by observing 
man's wants and character, and the necessity, thence 
resulting, of giving encouragement to labor ; we 
notice also everywhere a right of property in land 
and we have now to consider whether such a right 
is justifiable. 



60 COMMON SENSE; OJt, 

102. The case is well stated in Mr. Opdyke's Kttle 
work on political economy : 

He supposes the members of a community " pos- 
" sessed of a right common to each to partake of the 
"utility derivable £i"om the soU. They mutually 
" agree to surrender to the mass that common right, 
" and to accept in its stead the exclusive right to de- 
" finitive portions." 

103. Evidently there is no injustice here, and 
whether we consider a savage or a civilized society, 
the immense advantage which accrues to all from 
the adoption of this rule will become apparent. 

104. In the savage state, man,' as a hunter, re- 
quu'es at the least seven square miles of territory 
for the support of each member of the tribe. Let 
us suppose one of them to offer to surrender his 
right over the ground now held in' common by the 
tribe, on condition of receiving an exclusive right to, 
not seven square miles, but one or two hundred 
acres of land only. 

This exclusive right being granted to him, al- 
though the total area of hunting ground is diminished 
by a few hundred acres, the average for each mem- 
ber of the tribe is increased, while the settler de- 
votes himself to the production of commodities 
which will not only provide a greater amount of 



FIBST STEPS IN POLITICAL ECONOMY. Q\ 

comfort for liimself and family, but will also yield a 
surplus store, whicli may some day serve to support 
otlier members of tlie tribe should a failure of tlie 
hunting season threaten them mth starvation. 

105. The case is not less strong with civilized so- 
cieties. The pioneer who clears the forest would 
find no inducement to do so if another could obtain 
the land he had cleared. The farmer would have 
little encouragement to turn up the soil and sow the 
seed, and still less to enclose, manure, or irrigate his 
' field, if, even after he had gathered in his harvest, 
another coidd appropriate the improvements he had 
made. 

106. "We have seen that all production is but 
changing the position of ma.tter so as to vary its 
form or change its place. The pioneer, farmer, 
miner and builder do the same. They, too, change 
the position of matter, and in so doing clear the for- 
est, enclose, drain, irrigate, manure and cultivate the 
field, open shafts and mines, build houses and fac- 
tories ; and they cannot receive back, all the pro- 
ducts of their labor because part of it remains fixed 
in the soil in the shape of improved f ertihty, or other 
convenience or aid to industry. By their labors 
they have rendered future labor more productive, 
and to them, therefore, should be reserved the use 



62 COMMON SENSE; OR, 

of tlie implement wliose virtues they liave discovered, 
and enhanced, or all would be discouraged from like 
effort in the future, and progress would be arrested. 
The right, then, to property in land improved 
by man's labor, is now seen to have the same 
foundation as the right to any other species of prop- 
erty, subject however, to a special liability to taxa- 
tion for objects common to the whole community, to 
be presently explained. 

107, Rent. — Let us suppose that into a commu- 
nity where land has been utilized and improved, 
there should enter a stranger desirous of applying 
his industry to land. It will be of Httle consequence 
to him whether he take up new land, or pay to the 
owner for the use of land already improved the dif- 
ference between the larger production of the latter 
and the smaller production of the former. 

The feehng of and desire for ownership might 
tempt him to the former ; the greater comfort and 
certainty would incline him to the latter, and the 
scale would pyobably be turned by the owner of the 
improved land offering to let it to him for something 
less than the entire additional produce. 

The amount he pays to the landowner for the use 
of his improved land is termed " Eent." 

108. The amount of the rent the cultivator will be 



FIBST STEPS m POLITICAL ECONOMY. gg 

willing to pay for the use of land mil vary greatly 
witli circumstances. In our own country, wliere 
millions of acres of fertile land can be liad for next 
to nothing, convenience of situation, proximity to a 
market, and general accessibility will be the first 
consideration.* 

109. Let us su]3pose two classes of lands to be in 
cultivation, one situated in New Jersey yields, sup- 
pose, to the cultivator, 200 barrels of flour, with a 
given expenditure of labor and capital, and costs 30 
barrels for transjaortation to market, and exchanging 
for such objects of utility as the farmer desires. 
Suppose another, situated in the interior of the State 
of Ilhnois, yields to the cultivator 300 barrels, upon 
the like expenditure of labor and capital, but costs 
him 200 barrels for transportation, and expenses of 
exchanging his products, it is obvious that the Illi- 
nois farmer could afford to pay 50 barrels for the 
use of the New Jersey farm, and be 20 barrels the 
better off for the operation. 

110. Let' us now suppose the increasing popula- 
tion and requirements of society to render necessary 
the cultivation of other land, which, whether more 
or less fertile, than any other of those already in 
cultivation, will yield to the cultivator for the same 
expenditure of labor and capital, a net return of only 



54 COMMON SENSE; OR. 

80 barrels. He could evidently afford to pay some- 
thing less than 20 barrels as rent for the use of the lUi- 
nois farm, or something less than 90 barrels as rent 
for the use of that in New Jersey, rather than take up 
the thu'd description of land. 

But as the increasing population requires the crop 
of the latter, they must pay a price for it, sufficient 
to make the cultivation of it profitable, and this 
price per bushel being higher than the rate liitherto 
paid for the produce of the more fertile land, the 
owners of the first and second descriptions of land, 
wUl be able to collect a rent nearly equal to the dif- 
ference in the respective superiorities of those lands 
over the third land. 

111. Precisely the same process goes on with 
stores and houses in cities, the rents whereof increase 
with the eligibjhtv of their situation for earning profit 
or for enjoyment. 

Eor the least eligibly situated stores a rent is ob- 
tainable rarely sufficient to pay the mterest upon 
the capital expended ui their erection, but as the 
gro'vv'th of the city adds to the once least eligible 
situations, a capacity for earning profit, these in 
tm-n cease to be the "least eligible," and command 
a higher rent for the same capital. 

112, Metit, it must now be apparent, cannot he the 



FIRST 8TEP8 IN POLITICAL ECONOMY. 65 

cause of clearness, or difficulty of production. It may be 
a consequence, but cannot be a cause of such, 
comparative difficulty or facility. It is a re- 
sult or consequence of tlie necessity to wliicli tlie 
increasing wants of society have given rise, of having 
recourse to lands, the net return from whicli is less 
for the same expenditure of labor and capital, than 
lands previously occupied. "When the increased 
fertility or accessibility of land, is the result of labor 
and skill, then rent is merely a profit on capital, but 
when it arises from the growth of population, ren- 
dering it neccessary to resort to less fertile or conve- 
nient lands, EENT becomes a share in the general 
product of iadustry, and if it could be separated from 
the return earned by skill and labor, would properly 
belong to the community. Eent is therefore a fitting 
subject for taxation, within such Kmits as shall take 
only such portion as has not accrued through such 
skill and labor, as above mentioned. 

113. If now, among the applicants for a farm or 
store, one man of superior skill or sagacity, perceives 
how to obtain a larger retu^ than others, he will 
offer a higher rent to secure it. 

Thus the farm or store comes into the occupancy 
of him who can by judicious administration, obtain 
the largest return for the same expenditure of capi- 



58 COMMON HENSE; OR, 

tal and labor, benefitting alike himself and the com- 
munity. This furnishes yet another illustration of 
those beautiful harmonies of nature, of wliich so 
many instances have already appeared in the course 
of our investigations into the conditions of human 
well being. 

114. In the more densely peopled countries of tha 
old world, rent, tiiough dependent on the same prin- 
ciples, nuis a somewhat different course. Except in the 
case of olfices, stores, warehouses, wharves and other 
places of business, and of residences in o.ities, de- 
bility of situation will be subordinate to the question 
of fertility of the soil or productiveness of the mine. 
The means of inter-communication are generally 
sufficiently good to render the cost of transport and 
of agency in exchanging so small, tliat it is of com- 
paratively little consequence whether a farm or mine 
be situated at fifty or two hundred miles from the 
market. The abundance of roads renders the entire 
area around the market of nearly equal eligibility, 
instead of the practicable farms being, as with us, 
confined to the margins of a few roads, though even 
in the most civilized parts of Europe, land border- 
ing on a railroad or navigable river will command 
a sensibly higher rent than land of tlie same degree 
of fertihty a few miles distant. 



FIRST STEPS m POLITICAL ECONOMY. Ql 

115. Tlie greater area of productive cultivation in 
Europe, consequent on tlie whole circle around the 
market being nearly eqvially eligible, while we are 
continually confined to a narrow strip bordering a 
road, serves to illustrate the truth that it is not de- 
sirable to offer any inducements to capitahsts to 
construct roads in advance of the natural wants of 
the commuuity. 

116. The tendency of lands to fall into the hands 
of those capable of employmg them most pro- 
ductively, which we have seen to be the case when 
people are left free to seek what they deem most to 
their advantage, leads also to another conclusion ; 
viz., that it cannot be the " extortion or avarice of 
landlords " which causes a rise in rents ; the real cause 
is the increased wants of the community ; the imme- 
diate or proximate cause, the desire of the most ca- 
pable tenants to secure the means of turning their 
capacity to the best advantage. The desire of the 
landlords on the contrary to secure the best tenants, 
tends to lower rents. Hence the mis-called " grasping 
of landlords " so far as it has any effect at all, is in 
the reverse direction to that which is popularly 
ascribed to it, viz., it tends to lower instead of rais- 
ing rents. 



68 COMMON SENSE; OR, 



CHAPTER IX. 

Value. Demand and supply. Intrinsic value a verbal con- 
tradiction. Value, how determined. Market value. 
Speculators. Average value. Cost of reproduction. 
Labor and utility essential to value. 

11 7, Yalue, — The laborer's share in the products 
of labor is, we have seen, generally received by him in 
advance, and should be apportioned among laborers 
in proportion to their capacity for production. If 
the capitahst fail so to apportion his capital, the loss 
falls upon him. Further, the commodity he pro- 
duces is intended to be exchanged for others and if he 
fail to produce what others desire, he will be unable 
to obtain from them what he requires. 

The quantity of other commodities or ser-vdces' 
which he can obtain in exchange for what he pro- 
duces, or is about to produce, must be constantly in 
the mind of every laborer or director of capital, and 
this quantity is the value of the commodity or ser- 
vice about to be exchanged measured in those other 
commodities or services. 

118. Hence value is the quality of being able to 
be exchanged for some object of utility or for ser- 



FIRSl STEPS IN POLITICAL ECONOMY. 



vices, and it is measured by tlie quantity of other 
commodities or services obtainable in exchange for 
the commodities or services to be disposed of. 

119. Intrinsic value. — In ordinary language 
the word VALUE is employed to denote, not the qual- 
ity of exchangeability, but the quantity which meas- 
ures that quality, and used in this sense there can 
be no such thing as "inteinsic value." 

Used in this sense, there can be no value except 
in relation to other things, while the word " intria- 
sic" imphes a quality existing in the object itself. 

120. Gold is valuable, malleable, yellow and heavy. 
Its yellowness is an attribute which, (light being as- 
sumed present,) may be regarded as intrinsic. So 
vdth its malleabihty and weight, for though to meas- 
ure these qualities, the gold is referred to some 
standard, the actual malleability and weight are 

'qualities intrinsic to the gold. Its value, however, 
has no existence except in relation to other com- 
modities, and the quality and amount of that value 
change not only with every commodity with which 
the gold is being compared, but with any one com- 
modity in different circumstances of time, place or 
possession. 

121, Value^ how determined. — Suppose two 
persons, A and B, one of whom, suppose A, is 



70 COMMON SENSE; OR, 

able to produce fifteen liats in a given time 
witli a given expenditm-e of labor and capital, 
and tliat with the same expenditure he could pro- 
duce five pairs of pants, while the other, B, could 
produce fifteen pairs of pants with the like expendi- 
ture, but only five hats — /'. e., A's production equals 
fifteen hats or five pau's of pants ; B's production 
equals five hats or fifteen pairs of pants — it is ob- 
vious that A could exchange ten of his hats against 
ten of B's pants, and each be five hats and five pairs 
of pants better off for the exchange. 

122. Suppose two boys, one of whom possesses a 
penknife and the other a bag of marbles ; the boy 
who o^\^ls the penknife wishes to play at marbles, 
and the owner of the marbles wants to cut a boat 
out of a block of wood ; they can exchange the pen- 
knife against the marbles ; each gratifies his desire, 
and the value of the penknife measured in marbles, ' 
as estimated by both of them, is the bag in question, 
and the value of the bag of marbles is the penlmife. 
In this case, each boy measures the gratification he 
anticipates to derive from the thing he is to receive, 
calculates whether he could get the same enjoyment 
by a less sacrifice than that of all the enjoyment he 
might derive from the thing he gives in exchange, 
and arriving at the conclusion that he will derive 



FIBST STEPS IN POLITICAL ECONOMY. 7I 

greater enjoyment from the thing lie is to receive 
than from that with which he is about to part, and 
that he could not get the same enjoyment at a less 
cost, he consummates the exchange, and each is the 
gainer by the excess of gratification he derives from 
the thing he now possesses over what he believed 
that he might have derived from the thing with 
which he has parted. 

123. Suppose, now, a surgeon to be called in by a 
miller to set a broken arm. He performs a service. 
He needs flour for his family, and accepts in exchange 
say twenty sacks of flour. To obtain the flour the 
miller built his mill and ground wheat or other grain 
for the farmer. Tlie re ward/or the services tlivs rendered 
hy Mm lie now makes over to the surgeon in exchange 

.for the service of setting the broken limb. 

Or the surgeon may visit the family of a lawyer, 
give his services in endeavoring to heal the lawyer or 
some member of his family, and may receive, in ex- 
change for his services, some legal information or as- 
sistence — i. e., service — from the lawyer. 

124. Two persons about effecting an exchange 
estimate the amount of labor and capital each would 
have to devote to obtain the commodity, or yield 
the service required, and establish between them the 
value of each commodity or service measured in the 
other as the result of such estimate. 



72 COMMON SENSE; OR, 

125. The one commodity or service may have cost 
more time, labor and capital to any indefinite ex- 
tent than the other commodity or service, or may 
possess an enormously greater utility ; if, neverthe- 
less, the owner of the former desires the latter, and 
could procure it only by a larger expenditure of 
time, labor and capital than it would cost him to re- 
produce his own commodity, he will gladly consent to 
exchange the former for the latter, and so estabhsh 
its value as measured in his commodity. 

126. Value then results from the estimate formed 
by two or more persons about to effect an exchange 
of the satisfaction from the service or commodity to 
be disposed of by each other, and is measured by the 
quantity of other commodities or services given in 
exchange for the commodity or service to be dis- 
posed of. 

127. MarketValue, — As in consequence of the 
adoption of the division of labor, each producer 
must, to get w^hat he desires, produce what is desired 
by other people, the question arises how is the in- 
tending producer to know what commodity is likely 
to be most generally desired, and how is the amount 
of commodities he is to receive, i. e., how is the 
value of this commodity to be determined? To 
answer this question in each particular case, requires 



jFZB/St steps in political economy. 73 

judgment and experience of the various circum- 
stances and phenomena of the industrial society to 
which he belongs. A knowledge of the causes of 
fluctuations of yalue is indispensable to the acquire- 
ment of even a moderate degree of that judgment 
and experience. 

128. Let us suppose a state of the market such 
that a pair of boots, a pair of pants, two hats, and 
100 lbs. of flour would exchange for one another ; in 
other words, that the value of a pair of boots meas- 
ured in flour shall be 100 lbs., measured in hats 
shall be two hats, and measured in pants shall be 
one pair, and conversely that the value of 100 lbs. 
of flour measured in boots or pants shall be one 
pair, or measured in hats shall be two hats. 

Suppose now, while everything else remained the 
same, the quantity of one commodity, say boots, 
were to be increased ; then they who had boots to 
give in excharge would obtain, for each pair of 
boots, less in exchange than they had obtained 
before ; boots would fall in value owing to the in- 
creased supply, and all other commodities would 
rise in value measured in boots. 

129. Let us now suppose, other things remaining 
the same, the desire for boots to be diminished, the 
boot owners would in such case be compelled to ac- 

4 



74 COMMON SENSE; OE, 

cept less in exchange for each pair of boots; boots 
would fall in value. 

130. In the converse case of an increased desire 
for boots, the boot owners would receive more in 
exchange, on account of the desire felt by each per- 
son net to be among those who went without. 
Boots would rise in value, and all other commodi- 
ties would fall in value measured in boots. 

131. Among the various commodities which form 
the objects of man's desires, and are tlie results of 
his labor, the supply of some is more subject to vicis- 
situdes than is that of others. Vegetable produc- 
tions, which depend so much upon the weather are, 
as a class, more subject to fluctuations of supply 
than clothing. 

Among the former, fruits popularly so called, and 
potatoes, being particularly perishable, are subject 
to greater fluctuations than corn and grain, some 
surplus of which generally remains from former har- 
vests, v/hile none of the old crops of fruits or pota- 
toes can be preserved, except by subjecting them to 
a laborious process specially devised for the pur- 
pose. 

Machinery, factories, ships, roads and houses are 
less subject to fluctuations of supply than either 
food or clothing, the former being comparatively 



FTRSr STEPS TN POLITICAL EGOJSrOliT. 75 

durable, so that the annual product forms but a 
small portion of the entire stock on hand. 

This is true in a still more eminent degree of gold 
and silver, the annual production whereof is very 
small in comparison with the accumulations on 
hand. 

132. The supply and demand of commodities are 
greatly aifected by anticipations of future supply 
and demand. Fortunately for mankind a bad har- 
vest is generally preceded by unfavorable weather 
which causes farmers to keep back supplies. Spec- 
ulators and merchants scour the country to gather 
up this store, which but for their exertions, might be 
brought to market and temporarily keep down the 
value it is true, but at the risk of converting a short 
supply into a famine by preventing that rise in price, 
by which the community would be warned to dimin- 
ish their consumption, and notice given to the peo- 
ples of distant lands that their surplus food would 
find a profitable market in supplying the deficiency. 

If on the other hand the prospects of the coming 
harvest are favorable, those who have last year's 
grain on hand will hasten to bring it to market, 
speculators and merchants postpone their demand to 
await the forthcoming supply, and when prices have 
reached tlieir lowest point, they buy it up and pre- 



76 COMMON SENSE; OR, 

serve for the hour of need what might otherwise be 
wasted. 

133, Siyeculators, — Contrary to the prejudices 
still rife amongst the people, we now perceive that 
honest and honorable speculators, are, ivhen success- 
fid, of the greatest service to society, the services 
they render being, in fact, measured by the profits 
they reahze. 

134. We have ascertained that the fluctuations of 
value depend on the fluctuations of supply and de- 
mand, or more correctly expressed, that value is de- 
termined by the equation of supply and demand ; 
the term " equation of supply and demand " being 
used to express the fact of the demand becoming equal 
to the supply by rising or faUing, until the quantity 
in the market is exactly carried off at the increased 
or lessened value. 

It remains now to investigate the laws which regu- 
late the fluctuations in the suppty and demand re- 
spectively. 

133. Average value, — Each producer seeks to 
produce the commodity which will enable him to 
obtain the largest amount of other commodities in 
return. If on taking a large number of the values 
obtained for one commodity, say hops, he finds that 
the average value of the hops he produces is less 



FTBBT 8TEFS JK POLITICAL ECONOMY. 77 

than that of some other commodity, say wheat, cost- 
ing the same amount of capital and labor for its pro- 
duction, jpart of the capital heretofore employed in 
the production of hops will be employed in pro- 
ducing wheat, or in some other industrial occupation, 
until the diminished supply of the. hops, leading to a 
rise in their value, shall cause the capital and labor 
employed in growing them to yield at least an equal 
return with capital employed in other departments 
of industry. 

Hence, the fluctuations in the equation of supply 
and demand are subject to the anticipations formed 
by the administrators of capital of probable future 
values as compared with the cost of reproduction. 
These anticipations are formed on a computation of 
average values in the past, and of the circumstances 
which may affect supply and demand in the future. 
It is by comparing tlie probable average value thus 
anticipated with the cost of reproduction of a like 
utility, i. e., of an object capable of supplying the 
hke amouut of satisfaction, that the operations for 
future supply and demand are regulated. 

136. Hence the cost of reproduction of a like utility 
regulates the average equation of stipply to demand, and 
this cost, therefore, is the regidator of average values. 

137. It is a self-evident conclusion from the fore- 



78 COMMON SENSE; OB, 

going that cost, [i. e., labor,) and utility, must both 
concur in the production of a commodity in order 
that it may possess value. 



CHAPTEE X.. 

Means of facilitating interchange. Weights and measures. 
Measure of value. Money. Gold and silater. Proper- 
ties WHICH adapt them FOR USE AS MONEY. ThE DOLLAR. 

Absurdity of attempts to fix by law the relative values 
OF gold and silver. Causes of fluctuations in the value 

OF MONEY. 

138. 3Ieans of facilitating interchange. 

As the division of labor was carried out more and 
more minutely, interchange assumed greater impor- 
tance, and means were hit upon for faciUtating it. 

139. The most important of these means, was the 
adoption of various standards by which to measure 
length, surface, cubic contents or caj)acity, weight, 
time, heat, and value. 

140. The adoption of these standards of measure 
enables the mind to be set free from any necessity 
for dwelling upon quantity. Quality and value could 
now be exclusively considered. The determination of 



FTBST STEPS JJSf POLITICAL ECONOMY. 79 

quality was also in many cases greatly facilitated by 
the use of one or more of these different measnres ; 
while many industries could not have been discovered 
or invented at all, and we should have continued 
without the means of enjoyment obtained through 
them, but for the prior invention and use of these 
standards of measure. 

141. Standaeds of measure thus serve both as 
laim'-saving expedients and as instrumients tvhereby 
labor IS rendered more jpi'oductive. 

Through the assistance they render, the judgment 
can be concentrated on a few considerations and 
is thereby rendered more skillful in arriving at just 
and accurate conclusions. 

But to enable the full advantages derivable even 
from our present systems of measm-es to be secured, 
a general prevalence of honesty in their employment 
is necessary. 

142. Unfortunately, there are persons who seek to 
abuse the confidence reposed in the general accu- 
racy of the various measures in use. 

"Whatever organization may exist for the detec- 
tion and punishment of such dishonesty, the strong- 
est safeguard against its occurrence must be the 
training of the young in habits of thought and in con- 
duct which will lead them to appreciate at its full 



80 COMMON SENSE; OR, 

imqiiity the wickedness of sticJi acts, and to estimate 
at its jnst weight the burthen thrown upon indnstry 
through the increased watchfiUness they necessitate, 
and the check thereby put upon the productiveness 
of labor. 

143. Referring the student to the appropriate 
works upon the various other measures, we will now 
proceed to examine one of the chief instruments 
employed to facilitate interchange — viz., the meas- 
ure OP VALUE. 

The necessity for a common measure of value 
early presented itself. 

It would rarely happen that two persons possessed 
each what the other needed, in the exact quantities 
desired, so long as barter remained the only manner 
in which interchange could be effected. So soon as 
some object was discovered which all persons would 
be desirous of having, they would be willing to ac- 
cept it in exchange for their commodities, because 
with it they could alw^ays obtain, in exchange, the 
commodities they might need. The object which 
was found to fulfil this requirement received the 
name of Money.* 

144. It is an interesting study to observe the var 

* From " moneta," Latin for adviser. 



FIRST STEPS IN POLITICAL ECONOMY. gl 

rious objects wiiich, from time to time, in different 
ages of man's liistory, and among different peoples, 
liave been selected to perform tlie office of a meas- 
ure of value. One tiling in particular must be 
noted. As the measure of length must possess length, 
so must the measure of value possess value, 

145. Now we have seen that cost — i. e., labor and 
utility, mnst botli concur in the production of a 
commodity in order that it may possess value; 
hence whatever be the measure of value adopted, it 
must be an object of utility, and must cost labor to pro- 
duce. 

146. In constructing, and selecting the materials 
for, the standard measures of length, weight or ca]3a- 
city, so much care as possible has been taken to 
make them exact and of such material as should be 
least liable to fluctuations, as from the weather or 
other causes. So in selecting measures of value, 
the gTeat desideratinn is to iind some commodity 
which should be least subject to be affected by those 
causes which occsisioji fluctuations in value. 

147. After many different materials had been tried, 
gold or silver was at last hit upon by every civilized 
nation, mainly from the fact of the very large stock 
on hand in comparison with the annual production. 

148. The prominent cause of fluctuations in value, 



82 COMMON SENSE; OR, 

it •will be remembered, is, tliat of most commodities 
tbe annual j)i'oduct bears a large proportion to the 
stock or quantity on hand. While in the case of 
gold and silver, (called the ]Drecious metals,) their in- 
destructibility has caused a very large accummula- 
tion compared with the quantity annually produced. 
When to this is added the great cost of the produc- 
tion of the precious metals, and the universal de- 
mand for them, (in consequence whereof their bulk 
is small compared with their value, whereby they are 
easily portable,) and that by reason of their ductihty 
and homogeneousness they can be readily divided and 
reduced into pieces of any requu'ed shape, weight 
and standard of fineness, gold and silver, and gold 
in preference to silver, are seen to possess in a su- 
perlative degree all the qualities desirable in a meas- 
ure of value. It must, nevertheless, be remembered 
that gold and silver are themselves commodities, 
subject to the same laws of vahie as all other com- 
modities, and that when it is said that a commodi- 
ty, say corn, has risen in value as measured in gold 
or silver, it is the same thing as saying that gold or 
silver has fallen in value as measured in corn. The 
cause of the ^fluctuation would, however, have to be 
sought rather in a diminished supply of corn than in 
any increased supply of gold or silver. 



FIBST STJEPS m POLITICAL ECONOMY. 83 

149. But neitlier gold nor silver is fit to be em- 
ployed in a pure or unalloyed state. 

For tlie purpose of being used as coin, gold needs 
to be hardened, and this is best done by the admix- 
ture of copper, with a very small percentage of silver. 

150. To recapitulate : The qualities which recom- 
mend gold or silver as the materials of which the 
standard of value should be composed are : 

(1.) The gTeat estimation in which they are held. 

(2.) Portability, i. c, their large value, (consequent 
on the great cost of their production,) in a compara- 
tively small bulk and weight, as compared with the 
value of other commodities of given bulk and weight. 

(3.) Durabihty, being almost indestructible. 

(4.) Their capacity for receiving an alloy, i. e., for 
having mixed Avith them some other metal in any 
given proportion in such a manner that the whole 
mass is of a uniform standard of fineness in all its 
parts, whereby the softness of gold and the brittle- 
ness of silver can be modified to any desired degree. 

(5.) The smallness of the annual production, com- 
pared with the total stock on hand, a property result- 
ing from their durabihty and great cost of production, 
and rendering them little susceptible to fluctuations 
of value when measured in all other commodities. 

(6.) Their homogeneousness of structure, or quahty 



84: COMMON SENSE; OB, 

of being alike tliroughout, wliereby they can be 
readily verified. 

(7.) Fusibility. 

(8.) Tlieir capacity for readily receiving a delicate 
impression and faithfully preserving it, which may 
be termed Coinability. 

(9.) Their peculiar sonorousness, i. e., the peculiar 
ringing sound given out by them when struck, to 
which sound the name of ' metallic ring ' has been 
given and which affords an easy and generally relia- 
ble test of the genuineness of the metal or coin. 

151. The value of gold and silver, like that of all 
other commodities depends on supply and demand, 
but as the principal demands for these metals is to 
serve as money, substitutes for money have to be 
taken into consideration in estimating the supply. 
Now of these substitutes, credit is the chief, and 
the quantity of gold and silver actually employed, 
bears in general, (in civilized communities,) hardly 
so great a proportion to the amount of credit, as the 
value of the small change in circulation, does to that 
of gold and silver. 

152. The causes which affect the supply and de- 
mand of gold and silver, iiTespective of alterations 
in the supply and demand of other commodities 
as com'pareil ivith one anothei^ are 



FIBST STEPS IN POLITICAL ECONOMY. 85 

(1.) An increased supply of commodities arising 
from the accumulation of sa-vings which will cause 
an increased demand for money to facilitate ex- 
changes. 

(2.) A diminished supply of other commodities 
arising from waste or destruction which will dimin- 
ish the demand for money. 

(3.) As ciAdhzation progresses the demand maybe 
diminished by the disuse of ornaments on the per- 
son, from an economical use of gold and silver, and 
from the general use of substitutes for money. 

(4.) An increased demand may arise from an in- 
crease in gold or silver objects of utility, or an in- 
creased taste for ornament, or from their replacing 
a debased or inferior currency, or from a widespread 
feeling of mistrust putting a stop to credit as a sub- 
stitute for money. In the cases numbered one and 
four the value of money will rise, in those numbered 
two and three the value of money will fall. 

153. Money being, as we now perceive, merely a 
a means of facilitating the interchange of commodi- 
ties, the mere measure of value, as other measures 
measure time, length, surface, capacity, weight, or 
heat ; an increase in the quantity of money can no 
more increase the commodities whose value it is 
used to measure, than an alteration of the unit 



36 COMMON SENSE; OB, 

standard measure of length, etc., could alter the 
quantity of the cloth or other commodities they 
measure. 

154. Let us suppose that every individual in any 
country should, on rising one morning, find every 
dollar of money he possessed tiu-ned into two dol- 
lars,* the first effect would be that all prices would 
be doubled ; but as gold and silver are commodities 
which the people of all countries are wilhng to re- 
ceive in exchange for the articles they produce, the 
people of other countries would hasten to export 
their commodities to the country where the increase 
of gold had taken place and take gold in exchange, 
until prices, in the country w^here the increase had 
taken place, had fallen to their normal state ; so 
that in the case supposed, the increase of gold, hav- 
ing increased the purchasing power of the country, 
would have led to an actual increase in the wealth 
of the community. 

155. Had, however, the country where the in- 
crease of gold had taken place, been shut out from 
intercourse with other coimtries, the only effect of 
the increase of gold would have been to increase the 
price of all commodities, and that all debtors woidd 

* Note well the hypothesis. The money is to be doubled — 
nothing else, and credit is left out of consideration. 



FIRST STEPS m POLITICAL ECONOMY. 87 

he able to satisfy their debts tvifh a quantity of gold 
having only half its forme?' purcliasing poiuer, lohile 
the creditor would receive the amount of gold or silver, 
but only lialf the yalue he expected. 

If such an accident as the doubling of the 
money of a country could be supposed to happen 
as a freak of nature no lurong would be committed, 
although suffering and hardship would result from 
this transfer to the debtor of a command over the 
stock of wealth of the community, which the debtor 
and creditor had alike calculated upon the creditor's 
receiving ; a transfer none the less real because ef- 
fected by the accidental reduction of the debt, 
which, remaining the same in name, weight and 
quahty of the coin in which it was to be discharged, 
is suddenly reduced to half its purchasing power. 

156. But if instead of every dollar in the country 
being doubled, the Legislature were to decree that 
thenceforth the dollar should contain but half its 
former weight of gold, and should be received by 
every creditor in payment of his debt at the rate of 
one debased dollar for each dollar due, it is obvious 
that an act of real spohation would be committed. 
Various governments have at different times had re- 
course to this expedient. Not daring wholly to re- 
pudiate their debts, they have pretended to pay 



88 COMMON SENSE; OR, 

them by giving the name of the "unit standard of the 
money in which they had agreed to pay their credit- 
ors to some less valuable thing, defrauding their 
creditors with a high hand, while pretending to pay 
them. But by thus tampering with the currency, 
preserving the name of the recognized measure of 
value while that to which the name has been givQn 
is altered, all contracts are violated, and all indus- 
trial arrangements distui-bed. 



CHAPTER XI. 

Price. Fluctuations. Warning furnished by rise in price. 

157, Price, — Having examined some of the 
general uses and functions of money, we are now 
prepared to understand the meaning and effect of 
fluctuations in price. 

Value, as before stated, means the quahty of being 
able to be exchanged for some other commodity or 
service and is measured by the quantity of commodi- 
ties or services which can be obtained for the com- 
modity whose value is in question ; when the value 



FIBST STEPS M P OLITICAL ECONOMY. §9 

SO obtained is received or measured in money, the 
term peice is employed to designate it; in other 
words, the value of any commodity measured in 
money is termed its price. 

158. Suppose a cold, wet spring prevailing over 
Europe to give ground for fearing a deficient harvest 
in that part of the habitable globe. 

Merchants, desirous of earning profit by sup- 
plying the most pressing needs of society, endeavor 
to buy up the stocks on hand in order to withdraw 
them from the market for the present. Farmers 
withhold a portion of their stocks, millers and bakers 
are eager to add to theirs ; the prices of breadstuffs 
rise, — warning the people of Europe to diminish 
their consumption, and giving notice to the farmers 
and speculators of America to send all the grain and 
flour they can spare to supply the needs of the peo- 
ple of Europe. The fears for the grain aroused by 
the unfavorable spring are followed by fears for the 
potato in which the bhght has shown and begun to 
spread. Prices rise yet higher. The cold, wet spring 
is followed by continued rains in June and July. 
The worst fears for the harvest in Europe are real- 
ized, and wheat rises in London to (say) |4.00 a 
bushel. 

Meanwhile America, Bussia and Egypt have 



90 COMMON SENSE; OK, 

been economizing tlieir consumption and hastening 
forward their stores. Immense quantities are on the 
way, the risk of famine is over, prices have reached 
their highest, but care continues to be used m the 
consumption of the stores on hand until a sHght fall 
in prices j)roclaims the arrival of the first of the fresh 
suppHes. Farmers, merchants and speculators be- 
gin to bring to market the stores they had kept back 
or accumulated, and realize in profit their reward for 
the great services they had rendered to society. 
The telegraph continues to flash tidings of enormous 
supplies being on the road attracted from all parts 
of the world by the high prices which have prevailed. 
Farmers and speculators hasten to bring their stores 
to market, so as not to be caught with heavy stocks 
on hand in the face of the increased supplies. Mil- 
lers and bakers hold back and reduce their stocks to 
the lowest possible point, in order that they may be 
able to purchase of the coming store at lower prices. 
Prices fall ; giving notice to distant peoples that the 
needs of Europe have been suppHed and that they 
may send their grain to countries where it is more 
needed. 

159. SimUar illustrations may be dra-wn from 
nearly every want of society, and it will be readily 
perceived that periods of scarcity must be periods •c^ 



FIBST STEPS m POLITICAL ECONOMY. 91 

comparative privation. The rise in price is not tlie 
cause, but the effect, first of the anticipation of scar- 
city, and then of the actual scarcity itself. It is a 
"warning note for diminished consumption, a clarion 
sound of invitation to distant peoples to supply a 
scarcity which only this rise in price prevents from 
becoming a famine. 

160. The successful speculator confers a boon upon 
society which the profit he realizes measures and re- 
wards. They, on the other hand, who, through error 
in judgmeiit, and sometimes in feeling, buy at a 
higher price and sell at a lower, withdraw a com- 
modit}'' from market where and when it is much 
needed, and supply it to one where and when it is 
less or little needed, and their loss is in general a 
measure of the injury they have inflicted on society. 

161. Here then we perceive another of those har- 
monies of nature to which we have before referred. 
In proportion as merchants and traders haiejit or injure 
society, in that same degree are they reivarded with 
profit or p>iinished hy loss. 

Thus, all the skiU, knowledge and judgment of 
those engaged in mercantile pursuits, while working 
for their own self-interest, are at the same tune en- 
listed in the service of the community, helping to 
guard it against want, and supplying what it needs 



92 COMMON SEN8E; OR, 

at til© times aud places it most needs it, as a means 
of earning profit for themselves. 

162. Among all civilized communities, the average 
prices of imported commodities must be above the 
average prices of the same commodities in the coun- 
tries from which they are exported; and whether 
gold or silver flow into or out of a country is a mat- 
ter of no more importance to the community than 
the flowing in or flowing out of the like value of any 
other commodity ; and were it not the fact that any 
given quantity of gold or silver represents an order 
on the world's stores for a like value of commodities 
deliverable on demand, their export or import would 
be of even less importance. 



CHAPTEE XII. 

Strikes. Combinations and lock-outs. The purchase power 
OF wages, not their amount in money, the proper subject 

FOR the laborer's CONSIDERATION. REDUCTION OF HOURS OF 

LABOR. Trades unions. Combinations to keep down wages. 

" CO-OPERATIVE " stores, FACTORIES, ETC. 

163, Strikes and Combinations. — The stu- 
dent of these pages has already realized to himself 



FIBST STEPS m POLITICAL EGONOMT. 93 

the truth that, whether as capitahst or laborer, the 
thought which should occupy his mind is not " How 
"much money am I to get as profit or wages? " but, 
" "What quantity of the necessaries and comforts of 
" life shall I be able to get for the money I receive 
■ " as profit or wages ? " 

It is unquestionably desh-able that this quantity 
should be a large one, and recourse is sometimes had 
to strikes and combinations among the employed, 
and to combinations and lock-outs among employers 
with a view to increase wages or profits respectively. 

164. Let us now enquire whether either or any of 
these means are adapted to secure the end in view. 

"We have already seen a very sure course, by which 
both profits and wages may be increased, viz. : by 
the general prevalence and exercise, on the part of 
the administrators of capital, of those qualities which 
enable them to direct labor to most advantage ; and 
the prevalence and exercise, on the part of the 
laborers of those qualities which will render their 
labor most productive and therefore sought after. 

165. "When the attainment of increased wages and 
profits is sought through improvement in these 
qualities, the sympathy conceded to the objects of 
laborers and capitalists, viz. : increased wages and 
profits, is gi'anted in even a larger degree to the 



94 COM 31 ON' SENSE; OR. 

means employed to attain tliem. How is it wlien 
recourse is liacl to combination'^ 

16G. By combination, in the sense in wliich it is 
now used, is meant an organization, composed either 
of employers or employed, by which, in the one case, 
a mutual agreement is come to by several employ- 
ers, to refuse to employ their caj)ital in the purchase 
of labor, unless the sellers will agree to certain terms 
proj)osed by the employers ; in the other case it is 
a like agreement among the sellers of labor to refuse 
to sell it unless the employers agree to conditions 
proposed by the employed. 

167. As no agreement can be necessary to ensure 
the performance of, or abstinence from the acts in 
question, if such acts, or the abstainmg from them 
would be beneficial to those Avho perform them, such 
combinations must have for their object to induce or 
compel those joining in them, or others to do that, 
which in their ojoinion is injurious to them. As the 
consequence of men's acts fall primarily upon them- 
selves, no one can have so sensitive an interest in 
what he does, as each man himself. To require 
him therefore, to do what he believes will be an in- 
jury to himself or those dear to him, is one of the 
worst forms of tyranny. Nor can we fail to be im- 
pressed with the contrast which on the one hand 



FmST STEPS m POLITICAL ECONOMY. 95 

such an antagonism presents between tlie supposed 
interests of tlie various classes of tlie employed, and 
between employers and employed generally, to that 
harmony of their real interests, we, on the other 
hand have heretofore observed. As truth cannot be 
inconsistent with itseK, this contrast affords an ad- 
ditional incentive to our efforts, to detect the cause 
of this apparent contradiction. 

168. Let us first consider the effect of a combina- 
tion among the employed to obtain higher wages; 
If the object be to obtain higher wages for all labor- 
ers, how is it to be effected? Can the capital out of 
which wages are paid, be increased at pleasure? By 
rendering their labor more productive, laborers may 
induce capitalists to employ as capital, wealth, which 
would otherwise have lain idle, or been reserved for 
enjoyment. By this indeed the fund to be divided 
among laborers as wages would be increased; but 
what combination to raise wages, by giving to the 
capitalist a less return for his capital, can induce him 
to convert his unemployed wealth into capital? 

But now suppose the combination to be confin- 
ed to the object of obtaining higher wages, for 
the laborers engaged in a particular trade. Either 
the laborers in that trade had been receiving wages 
lower than what was being paid for the like 



96 COMMON SENSE; OR, 

labor and skill in other trades or they were not. 
If tliej had, by some of their number transferring 
their labor to such better j)aid trades, or by the nat- 
ural flow of capital, to the trade in which it was re- 
ceiving more than the average rate of profit, the de- 
sired object would have been obtained, without any 
combination to secure it. If on the other hand, the 
laborers had been receiving the same reward for 
their labor as was then paid for like labor and skill 
in other departments of industry, their success in 
obtaining increased wages would have the effect of 
attracting other laborers from other trades, or of 
driving capital from their own, until their wages 
had fallen to the general level. 

169. Let us now suppose that, the combination 
having failed, recourse is had to a strike : that is, a 
number of workmen simultaneously cease working, 
and refuse to sell their labor, except at an increased 
money rate of wages. As we saw in the case of a 
combination, if they had been receiving a lower re- 
ward for their labor than was being paid for like 
skill and labor in equally desirable trades, the strike 
was unnecessary because the natural flow of labor 
and capital would have produced the desired result, 
•whereas by ceasing to labor, and yet continuing to 
consume, production and capital are diminished; and 



FIBST STEPS IN POLITICAL ECONOMY. 97 

•while tliey deprive tliemselves of present wages al^ 
together, their own future wages and the average 
wages of all laborers, must fall. 

The diminution of production lessens the stock to 
be exchanged by means of money, and therefore 
causes prices to rise. The rise in price in the trade 
in which the strike occurs, necessitates a rise in 
money wages in other trades, in order that the labor- 
ers therein may be placed on an equal footing, thus 
the prices of all commodities are enhanced, leaving 
the laborers, — (supposing their strike to have been 
most successful,) in their former position, minus their 
losses during the strike ; but permanently injured by 
the bad quahties acquired or the good ones weak- 
ened during its continuance. 

170. This is by no means the whole of the mis- 
chief ; a repetition of strikes has the effect of dimin- 
ishing the inclination of capitalists to embark in a 
trade where their reasonable expectations of profit 
are liable to be destroyed by conduct on the part 
of others which they can neither direct nor control. 
Hence diminished capital will be employed in that 
trade ; from this cause also wages must faU in it, even 
below the level of other trades, since capitahsts will 
require a larger share of the joint product of the 
labor and capital employed, to compensate them for 
the additional risk. 5 



98 • COMMON SENSE; OR, 

171. The remote effects of a strike, especially if 
apparently successful, are unfortunately generally 
hidden from tlie observation of the laborer by the 
use of money. It will therefore be useful to renew 
our examination from another point of view. 

172. Suppose a strike amongst shoemakers to 
have resulted in raising their wages from $3.00 to 
$3.50 per day. Shall the wages of the tailor, who 
purchases the shoes of the shoemaker, remain the 
same as before ? Not only would it be unjust, but 
the shoemaker woidd refuse to consent to it. If, be- 
fore the strike, two pairs of shoes were worth and 
would exchange for one pair of pants, the tailor 
would require such a rise in his wages as should 
still enable him to obtain two joairs of shoes for one 
pair of pants. So with the butcher, the baker, the 
mason, bricklayer, farm laborer, and so through 
every industrial occupation, until the $3.50 of the 
shoemaker would procure no more of the necessa- 
ries and comforts of life than the $3.00 had pre- 
viously done. 

173. Further, when prices rise, the price of the 
"whole existing stock, which had been produced under 
low prices, augments and gives to its owners the 
amount of this rise ; adds it in fact to then- share of the 
products of past labor at the expense of those who 



FiEST sti:fs in political economy. • 99 

have to purchase or hh'e it from them. Hence, for 
instance, a strike in the building trade, adds to the 
wealth of the owners of houses already built ; a 
strike among factory hands to that of the owners of 
cotton, &G. In the meanwhile, what compensation 
can the laborer find for his self-imposed idleness of 
greater or less duration? Let us suppose the 
number of bricldayers and masons on strike to be 
three thousand, that their wages were $4.00 per day, 
and the strike to last twelve weeks, or say seventy 
working days. In wages alone this represents a 
loss to the working men of $840,000.00, besides at 
least double that amount lost to other laborers who 
depend upon the employment of the bricklayers 
and masons for opportunities to sell their labor. 
What quantity of improved houses, what opportu- 
nity for a provision against sickness and old age has 
here been squandered ! Even if a rise of say fifty 
cents a day were a real one, and not as we have 
seen purely imaginary, it would require to be con- 
tinued without any interruption of employment for 
a period of 8 times 70, or 560 working days, (of 
which for bricklayers and masons there are rarely 
more than two hundred in a year,) before the loss 
occasioned by this single, and apparently successful 
strike could be made good to the strikers. 



100* COMMON SENSE; OR, 

174 Now let US suppose the object of the strike 
to be a reduction of the hours of labor. 

Let it be assumed that the productiveness of 
labor in this country is such, that eight hours labor 
ought to suffice to procure an ample supply of the 
necessaries and comforts of Hfe to the laborer. 
That a reduction in the hours of labor ought not to 
be sought by a strike must be manifest from what 
has preceded, and that, if eight hours' labor would 
produce sufficient for the laborer now, ten hours 
might be necessary after a strike.. 

175, Continuous labor, — There is, however, 
an arrangement possible between employers and 
employed which would be highly beneficial to both 
parties and which is already generally adopted in 
most mining industries, viz., that of continuous 
labor, the workmen being divided into gangs or 
shifts, which relieve one another. 

176. That this is the true interest of the laborer 
will be apparent from the following- illustration : 

The cost of production in say a manufacturing 
industry is composed of 

(1.) Interest and insurance on capital invested in 
land, buildings and machinery. 

* The demonstration in the text is taken from an article by Mr. 
Chas. Moran of New York, which appeared in the Commercial 
Advertiser of New York in December, 1866. 



FIRST STEPS m POLITICAL ECONOMY. XOl 

(2.) Wear and tear of tools and machinery. 

(3.) Cost of raw material. 

(4.) Cost of superintendence. 

(5.) Wages. 

Of tliese tlie first remains tlie same whetlier tlie 
mackinery run six hours or twenty -four. 

The second varies nearly in proportion to the 
production. 

The third varies with the production, perhaps a 
little in excess by reason of some additional waste 
unavoidable in the case of night work. 

The fourth is but httle greater if the machinery 
run twenty-four hours than if it run but six. 

The fifth varies in proportion to the production, 
and loses or gains the whole of the diminished or 
additional cost of the greater or less quantity of 
raw material consumed, of superintendence and of 
wear and tear consequent on the less or greater 
number of hours the machinery is nm. 

Capital in the form first mentioned contributes no 
more to production when a mill runs twenty-four 
hours, than when it runs six, consequently the re- 
muneration for its risk is neither greater nor less in 
one case than in the other. Hence labor if not the 
only, is by far the chief gainer by the additional 
production consequent on running machinery addi- 



102 COMMON SENSE; OR, 

tional hours. Let vis suppose a cotton mill employ- 
ing one liunclred hands producing 5,000 yards of 
cotton cloth daily, running 12 hours, and that under 
these circumstances the division of this product 
which the laws of supply and demand have estab- 
lished is, one-third to capital, one-thiixl for cost of 
raw material and wear and tear, and one-third for 
labor. 

The mill will produce 2,500 yards when running 
6 hours, 4,167 yards when running ten hours, 5,000 
yards in twelve hours, and 10,000 yards when ran- 
iiing twenty-four hours. 

The proportion accruing to capital in each case is 
1,667 yards. The proportion to cover the cost of 
raw material and of wear and tear in each case will 
be 833, 1,111, 1,389, 1,667 and 3,333 yards respec- 
tively leaving for labor nothing in the first case 555 
yards, in the second 1,111 yards in the third 1,667 
in the fourth and 5,000 yards when running twenty - 
four hours. 

But as a mill requiring 100 hands for 12 hours 
work would require 200 for 24 hours we should have 
in the latter case double the number of hands em- 
ployed, each earning twenty-five yards instead of 
16,67. 

If now the hours of labor be reduced to eight per 



FIRST STEPS IN POLITICAL ECONOMY. 103 

day, on the liypotliesis that such is the productive- 
ness of labor that eight hours ought to suffice to 
procure for the laborer a sufficiency of necessaries 
and comforts of life, the return of each laborer is 
reduced to 5.5 yards. Kun the mill twenty-four hours 
by three shifts or gangs, thus employing three hun- 
dred hands instead of one hundred, and each laborer 
will receive 16.67 yards in place of 5.5. In other 
words, eight hours labor will give to each of three 
hundred laborers by running the mill continuously 
day and night, the same return which each of one 
hundred laborers could obtain by laboring twelve 
hours when the mills run only that time each day, or 
eight hours labor in the former case will be as pro- 
ductive as twelve hours in the latter. 

177, Trades Unions, — ^A passing glance at 
those deplorable instances of the submisson of the 
skilled and industrious mechanic to the will of the 
idle and unskilled in the operations of Trades 
Unions, is all that can now be necessary to awaken 
the attention of the student to the pernicious effects 
of these organizations as at present constituted. 

178. That the managers of these Unions are pos- 
sessed of great powers of organization is evident. 
What untold benefits could not result from society 
and, above all, to the laborers if such power were 



104 COMMON SENSE; OR, 

employed in the administration of tlie means at 
their disposal to useful purposes ! 

When in spite of the tyrannical restrictions, which 
these UnioHS impose uj)on the peaceful prosecu- 
tion of industrial occupations by economical, skill- 
ful, laborious, and well disposed persons, a store 
has been accumulated, instead of preserving it for 
future needs, and increasing it by judicious manage- 
ment, we see the leaders of the Unions wasting that 
store, by forcing their misguided followers, to days 
and weeks of idleness, an idleness more or less pro- 
longed in proportion generally, to the amount of 
savings in hand. 

Examine the rules of such societies. They in- 
variably contain provisions, directed to the de- 
struction of aU efforts at improvement. Among the 
bricklayers, the workman is forbidden to lay the 
trowel out of the right hand while at work, because 
if he did he could soon work better or more quickly 
than before. All the Unions require their mem- 
bers to refuse to work in a shop where men who are 
not members of a Union are employed. No rule is 
more universal among the Unions or more insisted 
on by its managers than this, and yet, what decree 
could be more despotic, what tyrant ever imposed 
a more galling yoke upon those subject to his will! 



FIEST STI:PS 7iV POLITICAL ECONOMY. 105 

179. The case of combinations among capitalists 
may be readily disposed of. 

A general combination of capitalists to keep down 
wages, is so evidently absurd a supposition, that its 
mere statement carries with, it its own refutation. 
It means a general combination to destroy capital. 
Of course if such a thing were possible, wages would 
disappear along with that capital, which is labor's 
best friend. A general combination of capitalists to 
lower or keep down wages, and yet not destroy their 
capital, is simply impossible. An analysis of the 
supposition, absurd as it is, will be a useful excer- 
cise for the student, and not beyond the powers of 
one who has read the foregoing pages with atten- 
tion. 

A combination has frequently been attempt- 
ed among capilahsts to keep down the wages of 
workmen, in a particular trade. The result has inva- 
riably been, as the student is now able to perceive it 
could not fail to be, the partial or total loss of the cap- 
ital of the men who were so foohsh as to engage in it. 

180. Co-operative stores, factories and 
wOrksJiojys, — Many efforts have from time to time 
been made to establish various industries, on what 
have been termed "Co-operative principles." The 
'Rochdale Co-operative store' of Bochdale, England 

5* 



106 COMMON SENSE; OR, 

was tlie first instance of any great success in this 
direction; a few otlier cases of successful manage- 
ment have occurred, but the vast majority of such 
attempts have resulted in loss and dissappointment 
to all concerned. The causes of the success in the 
one case, and of failure in the other, will not be dif- 
ficult to find ; but before seeking them, it is desira- 
ble to remove an ambiguity resulting from the use of 
the term " Co-operative;" as though co-operation were 
pecuhar to the industrial arrangements in ques- 
tion. 

181, Co-operation. — The student of these 
pages must have observed that from the moment 
that the division of labor is introduced into the in- 
dustrial pursuits of any community, all ivho labor co- 
poerate with one another. 

The shoemaker co-operates with the builders of the 
railroad, and of the steam engine, with the banker 
and with the farmer ; he co-operates with the miller 
to grind flour, with the stockman to breed sheep, cat- 
tle and horses, with the mill owner and factory hand 
to spin yarn and weave cloth, with the tailor to make 
clothes ; also to invent the printing press, the sewing 
machine and the electric telegraph, while each and aU 
of the persons engaged in these vocations co-operate 
to produce leather and to make shoes. 



FIBST STEPS /iV POLITICAL ECONOlfY. 107 

So far then as .tlie term " Co-operative store" 
or " Co-operative factory" is intended to intimate 
tliat " co-operation' is a feature special, or peculiar, 
to that store or factory, the term is a misleading one ; 
at the same time there is an idea underlying this 
ambiguous expression, which is intended to be ex- 
pressed by it, and what that idea is, it is desirable 
clearly to ascertain. 

182. Co-operative shops. — In a so-called 
" co-operative " shop or factory, the idea intended 
to be conveyed is, that those who sell their labor 
shall have part of the reward of their labor paid out 
of, and be a proportionate share in, the peofits to 
be thereafter received upon the capital, skill and 
labor employed in such shop or factory. This 
part then of the wages of labor in "co-operative" 
factories or shops is contingent upon profits, in- 
creases as profits increase, decreases and disappears 
as profits fall or disappear. As an interest in the 
future success of an industrial enterprise, is a pow- 
erful incentive to honest and earnest labor, any sys- 
tem or organization ivMcli shall give such interest, loith- 
out diminishing the unity so essential to successful man- 
agement, must secure to the enterprise organized on such 
system, an im-mense superiority over those in which no 
such interest is secured. 



108 COMMON SENSE ; OR, 

The great difficulty lies in combining, the re- 
serving of such interest to tliem who sell their 
labor, with unimpaired efficiency in management. 
All attempts in this direction are social ex- 
periments, as important steps to progress in 
industrial science as experiments in other sciences 
have proved to progress in'tliose sciences. Un- 
happily, in social and industrial science, experience 
so derived is generally purchased at a far greater 
cost of happiness on the part of the experimenters 
than in the case of experiments in other sciences, 
nevertheless such experiments furnish important gains 
to scientific knowledge, and from out of them in the 
course of time will be evolved a real and permanent 
gain to industrial organization and social science. 

183. The most successful effi^rts to combine the 
two features above mentioned which have yet been 
made, consisted in the setting aside, by the owners 
of the capital employed, of a portion of the profits 
after paying interest upon the capital, to be divided 
among the employes in proportion to the wages 
earned by them. Thus : if one workman (A) had 
earned $500, and another (B) $400 in say one year, 
and the amount to be divided was ten per cent, 
upon the whole, A would get $50 and B $40 as 
their respective dividends. 



FIBST STEPS m POLITICAL ECONOMY. 109 

Some experiments of tiiis kind so far as known 
have been eminently successful, cliieflj in conse- 
quence of the carefulness to avoid waste, unexam- 
pled industry and trustwortliiness wMch were de- 
veloped in tlie workmen, so that both capitahsts and 
employes had largely increased returns for their 
capital and labor. 

One of the most successful and interesting of 
these industrial partnerships, that instituted at the 
mines of Messrs. Briggs Bros., of Lancashire, Eng- 
land, was forcibly put an end to by the tyranny of 
a Trades Union to which some of the miners em- 
ployed by the Messrs. Briggs Bros, happened to be- 
long, and which they had not the manliness to quit 
when it launched its arrogant and tyrannical decree. 

184, Capital fumisJied by customers of 
^^ co-operative " stores, — ^In the case of "Co- 
operative " stores an interest in the success of the 
undertaking is given, not only to the workers but 
also to all who by purchasing at the store contribute 
to its success. 

As these stores are conducted on the system 
of cash payments, both in buying and selling, a 
great part of the remuneration for use and risk of 
capital, is saved, while in their sales, the economical 
aspect from which their customers are regarded, (in 



110 COMMON SE]\SE; OR, 

fact though not in name,) is that of furnishing a 
portion of the capital for carrying on the business, 
and the return they get is in fact, (where the busi- 
is successful,) a very large interest upon the capital 
so provided. 

185, Qualities of the managers of ^^co- 
operative '^ enterprises, — ^Now when we exam- 
ine the various cases of success and failure in these 
" co-operative " enterprises, one feature stands out 
prominently, and that is, the very remarkable de- 
gree in which the managers of the successful "co-op- 
erative " store or factory were endowed with the in- 
dustrial virtues, combined with a most iimcsual amount 
of love and sympathy for their fellotv men, and of gen- 
erosity ! 

The same industrial virtues, could have made 
them Kothschilds or A. T. Stewarts for wealth; 
owners of millions, as the well-deserved reward 
given by society for services rendered through un- 
flinching honesty, untiring industry, and marvellous 
skill. 

But their great love for and sympathy 'with their fel- 
low men, and their abundant generosity, have induced 
these self-denying managers to divide with their less 
gifted fellow-workers the reward earned by their 
pre-eminence in industrial virtues, and none should 



FIRST STEPS IN POLITICAL ECONOMY. m 

seek to detract from the admiration excited by tlie 
spectacle of so much self-denial. 

186. It is nevertheless yet to iSe determined 
whether a general prevelance of so large an amount of 
self-abnegation would really be beneficial to society. 
It must not be forgotten that of all the wealth acquir- 
ed by individuals, all that they convert into capital 
goes instantly to augment the wages fund, and is 
therefore, ( as seen above, §76, ) really consumed 
and enjoyed by those who sell their labor. It is 
only that portion which is consumed in the individ- 
ual j (or family,) enjoyment of the owner which does 
not go to augment the wages fund, and so far as the 
wealth itself when realized is concerned, the only 
difference is as to whether the portion thus reserved 
for enjoyment, shall be reserved for the enjoyment of 
the few or of the many. 

187, I*roflts of such organisations in 
reality a gift from the managers, — The pow- 
erful inducement furnished to the laborers to render 
their labor more efficient is what reaUy recommends 
this special form of " co-operation" where it can be 
adopted without impairing the efficiency of manage- 
ment. Unfortunately no plan yet devised has rec- 
ommended itself as presenting these two features 
combined, except in the presence of those remarka- 



112 COMMON SENSE; OR, 

ble industrial virtues on tlie part of managers wliich 
render tlie so-called "profits " of tlie " co-operative" 
enterprise a free gift from those managers, to those 
entitled bj the rules of the enterprise to share 
therein, of almost the entire rew ard due to the for- 
mer for the exercise of their unusual qualifications 
and industrial \irtues. 



CHAPTEE Xin. 

Credit. Facilitates interchange. Improper for domestic 
expenditure. consequences of the nonfulfilment of en- 
GAGEMENTS. Laws for the recovery of debts, injurious 

EFFECTS of. 

188. Credit, — The introduction of a standard 
measure of value greatly diminished the labor of in- 
terchange, but the devising of a means whereby the 
actual passing of money could be generally dispens- 
ed with, was calculated to diminish that labor in a 
still greater degree. 

Such a means could be found so soon as buyers 
and sellers were able to trust each other. 

189. "Wliere the same persons buy of and sell to. 



FIEST STEPS m POLITICAL ECONOMY. 113 

and can repose confidence, in each, otlier, tlie whole 
of tieir transactions may be conducted without any 
money passing, or at most, by small sums to settle 
balances struck at stated times. 

TMs selling without receiving the money at 
the time is termed giving ckedit. So, too, employ- 
ers and employed give credit to one another. The 
employer trusts the employe that the labor or time 
he has purchased will be faithfully performed or 
employed ; the employe trusts the employer that he 
will punctually pay the wages contracted for. 

The merchant who orders his agent to purchase 
merchandise trusts him to buy as cheap and as well 
as possible, yet more does he trust him if he pay 
for the merchandise before receiving it. So, too, 
the consignor trusts the consignee of goods, and 
where he receives advances upon them he both gives 

and receives ceedit. 

190. The fiiU benefits to be derived from the use 
of credit can only be realized among a people whose 
moral tone regards the fulfilment of engagements as 
a sacred duty. 

The capitahst who gives but never receives 
credit, has no precautions to take to be able to fulfil 
his own engagements. These are already fulfilled, 
and the comfort and ease of mind which accompany 



114 C03IM0N SENSE; OR, 

this mode of dealing and tlie undivided attention 
lie can in consequence give to the other departments 
of his business, ^^ill frequently more than counter- 
balance the advantages which, even when aU calcu- 
lations have been correctly made, are obtained by 
the use of borrowed capital. 

For the purposes of personal, household, or 
domestic consumption the giving and taking of 
credit can scarcely ever be other than most perni- 
cious hx its consequences. 

191. There are nevertheless instances in which 
credit may be employed with advantage to all par- 
ties with a great saving of labor to the community, 
and as a means of taking capital from hands inca- 
pable of administering it successfully to place it in 
those which can do so -to advantage. 

Let us suppose a dealer having a capital 
worth, say, ten thousand dollars and a ready money 
trade of, say five hundred dollars a week, beheving 
he could greatly increase his returns if he could in- 
crease his stock. 

Proceeding by degrees, he begins by accepting 
one, or more, month's credit for one thousand doUars 
and gradually increases his stock to twenty thousand 
dollars with a credit of ten thousand dollars paya- 
ble at various times, the latest being, say, six 



FIRST STEPS IN POLITICAL ECONOMY. HQ 

montlis, wliile Ms ready money trade has increased 
to $1,000 a week ; evidently sucli a trader wonld be 
trading •within the bounds of prudence. 

If in addition to taking credit, he also sells 
on credit, greater caution^is needed in the credit he 
takes. 

192. The giving of credit incautiously even by one 
who does not himself take credit, is not to be looked 
upon as a trifling offense. It is placing the means 
of doing mischief to themselves within the reach of 
the thoughtless and inexperienced, and giving oppor- 
tunities for recklessness and dishonesty. 

193, Laivs for the recovery of debts.— Bui 
the tendency of a judicious use of credit to place 
capital in the hands of those best able to administer 
it, has been greatly marred by unwise legislation all 
over the civilized world. 

That capital may fall into the hands of those 
best able to administer it, credit should be given in 
reliance only on the honesty, industry, judgment, 
skill, knowledge, and economy of the borrower. 

The penalty prescribed by nature for giving cred- 
it to the incapable or untrustworthy, {. e., to those 
who cannot administer capital to advantage, is the 
loss of the capital so lent, and this penalty, left 
free to work, would soon confine the recipients of 



116 COMMON SENSE; OR, 

credit to the honest and capable, with little regard 
to their wealth, except Avhere the want of wealth 
would betoken either inexperience or the absence of 
one or more of the industrial virtues. But most 
nations have passed laws^or the supposed recovery 
of debts from unwilling debtors, and large staffs of 
government officers are kept up at enormous cost to 
enforce those laws. In vain ! The remedy pre- 
scribed, the redress promised has everywhere broken 
down and proved delusive. A direct discourage- 
ment is also given to the industrial virtues by laws 
which pretend to enable creditors to recover their 
debts from dishonest debtors. In consequence of 
such laws, intending lenders look more to the wealth 
than to the conduct and character of the borrower, 
thus diminishing the demand for honesty, industry, 
and general trustworthiness, and tending to place 
capital in the hands of those who may squander 
alike their own capital and that which they have 
borrowed. 



FIRST 8TEP8 IN POLITICAL ECONOMY, ny 



CHAPTER XIV. 

Bills of exchange. P. O. money orders. Rates of Exchange. 
Par of exchange. • 

194. Bills of Exchange, — Arising out of the 
use of credit is the ingenious device of Bills of Ex- 
cliange, believed to have been invented bj the Jevi^s 
in the middle ages. 

Being one of the most fertile means of facilitating 
interchange and rendering labor more productive 
their invention and employment confer a vast boon 
upon society; though unfortunately, through the 
very greatness of their utility, they are liable to grave 
abuse. 

195. A bill of exchange is a written instrument by 
which a creditor directs his debtor to pay his debt 
to a third person named therein. It was invented 
as a means of settling a distant debt without the 
actual transmission of money. 

196. Suppose that every week commodities to the 
value of $20,000,000 enter New York from various 
parts of the world, and that commodities to about 
the same value quit New York; then, but for the 
device of bills of exchange, the New" York debtors 



118 COMMOIT SENSE; OR, 

would have to send $20,000,000 to their creditors, 
and the New York creditors would have to receive the 
same amount from their debtors, and $40,000,000 
in money would have to be sent to and from New 
York every week. To avoid the expense and risk of 
such transit, and yet adjust the debts of all parties, 
the New York creditors wi'ite orders directed to their 
debtors requiring them to pay their debts to the 
creditors of the New York debtors, and these orders 
they sell to the New York debtors. These orders 
are bills of exchange. 

The person who draws or makes a bill of ex- 
change is termed the drawer, the person in whose 
favor it is drawn is called the payee, the person on 
whom it is drawn, i. e., to whom it is directed, is 
called the drawee, and after he has accepted it, the 
acceptor; jDersons into whose hands the bill may 
have passed previously to its being paid, who write 
their names on the back, are termed indorsers, each 
indorser is also an "indorsee from the person who 
mdorses it to him, and the person in whose posses- 
sion the bill is at any given time, is termed the holder 
or possessor at that time. 

Bills drawn on distant places are called foreign 
bills. Bills dra"svn upon the same country or state 
are termed inland bills. 



FIEST STEPS IN POLITICAL ECONOMY. Hg 

197. The greater tlie distance of the places be- 
tween -wliich the commercial intercourse takes place, 
the greater "will be the advantage of employing bills 
of exchange in lieu of transmitting coin ; the greater 
at the same time is the necessity that the debtors on 
both sides should be persons of undoubted probity 
and punctuality. 

The two debts intended to be hquidated by 
the aid of the bill of exchange transmitted in lieu 
of coin, are neither of them discharged with the bill 
drawn on the distant or foreign debtor until that bill 
is paid, and the failure of the acceptor to pay the 
bill at maturity would render the New York creditor 
liable to the New York debtor for the face of the biU 
and interest, as well as for the loss the latter has 
sustained through sending a bad bill in the place of 
good money, while the New York debtor, besides the 
annoyance and possible loss of seeking to recover 
those amounts from the New York creditor, would 
have to purchase another bill, or remit money to 
liquidate his indebtedness. 

198. The system of orders known as Post Office 
money orders for the transference of small sums of 
money from one place to another through the instru- 
mentality of the Post Office, is, in fact, a system of 
Bills of Exchange to the payment of which the pub- 
lic fpitli of the nation is pledged. 



120 COMMON SENSE; OR, 

199. Bills of Exchange are also frequently em- 
ployed between persons residing in tlie same neigh- 
borhood. "Where A sells goods on credit to B, he 
frequently draws a bill for the amount which B ac- 
cepts payable at any agreed future date. A more 
frequent practice in tliis country is for B to give his 
promissory note, t. e., an instrument in ^v-ritiag by 
which he promises to pay to A or his order the 
amount of his debt at a given time. A can then 
transfer this promise either by sale without recourse, 
or by simple endorsement to a third person. If 
transferred without recourse, A has no further inter- 
est in the bill or note, but if simply endorsed, A is 
a guarantor of due payment by B to all subsequent 
holders and endorsers. 

Another pecidiarly useful function filled by these 
bills or notes will be seen when we treat of the sub- 
ject of Banking. 

200, Mates of Exchange, — The value of a 
biU discounted in the place where it is payable, can 
never exceed the amount expressed on its face ; with 
foreign bills, or bills drawn on distant places, the 
value may exceed this amoimt, by an amount not 
exceeding the cost of transmitting money with which 
to discharge a debt payable in that place. 

The proportion between the amount of money 



FIRST STEPS IN POLITICAL ECONOMY. 121 

given for a bill on a foreign or distant place and tlie 
.amount of its face is called the rate of exchange. 

"When a bill payable at siglit or on demand 
is worth the amount expressed on its face, the rate 
of exchange is said to be at par. 

When the amount paid for a bill of exchange 
in say New York, drawn suppose upon Germany, is 
more than its face value, or more can be ob- 
tained for it than the figure which represents the part 
of a Dollar into which the Beichsmark can be coined, 
multiplied by the number of Keichsmarks expressed in 
the bill, that is when there are more debtors to, than 
creditors of, Germany in New York, the rate of ex- 
change in the language in use in this country is said 
to rise, and bills on Germany are at a premium. 
Conversely, the rate of exchange is said to fall when 
the amount paid for the bill is less than its amount, 
and bills on Germany, (for instance) are then said to 
be at a discount. Thus the rate of exchange is a 
variation on one side or the other from the par, pro- 
duced by the state of the payments between the two 
countries. 

201. The jjar of excJiange between this coun- 
try and any other which has the same commodity as 
its measure of value is ascertained by a simple rule 
of three. 

6 



122 COMMOK SENSE; OR, 

To ascertain, for instance, the par of exchange be- 
tween this country and Great Britain the amount of 
pure gold in the dollar and the pound sterling is first 
determined \az. : 23:22 grains in the dollar, and 131 
grams in the pound*. Then $1 : £1 : 23:22 : 113, or 
the dollar equals 0.2055 of a pound or 4 shillings 
and 1.2736 of a penny. 

202. The debasement of the coin or other tamper-' 
ing with the currency, as by the fraudulent device of 
•what, to conceal its dishonesty is termed " an incon- 
vertable cinrency," affects at once the par of ex- 
change with all other countries. 

203. The exchange operations between this coun- 
try and Great Britain are comphcated by an absurd 
practice of calling the dollar equal to 4s. 6d. or 0.225 
of the c£l, and marking the fluctuations by giving 
$100 and a variable number of dollars in' addition 
for every $100 of the suppositious value of 0.225 of 
a pound, or 4s. 6d. The par with this suppositious 
dollar or fraction of the pomid sterling is thus ob- 
tained : 0.2055 ; 0.225 : 100: 109.5 very nearly. In other 
words, one himdred conventional dollars or X22 10s. 
sterling British, is the equivalent of $109.50 of our 
gold money, very nearly. 

* These are the weights of pure gold in the dollar and pound 
sterling respectively. The copper or other alloy is regarded as 
of no value. 



FIBST STMFS IJSf POLITICAL ECONOMY, 123 

204. Unfortunately, governments have frequently 
adopted tlie practice of debasing the currency. This 
has been done either by reducing the amount of 
pure metal in the coin, and attempting to cheat the 
pubhc by giving to the reduced quantity the same 
name which had been borne by the old coin, or by 
the yet graver though more insidious and disguised 
fraud of a forced paper currency. It therefore be- 
comes necessary to call attention to the fact, that in 
such cases the real par is altered and becomes the 
figure which denotes the quantity of the debased 
coin into which the quantity of gold or silver bulhon 
contained in the unit of the country with which the 
par is to be ascertained can be coined ; or, in the 
case of a forced paper currency, the real par is a re- 
duction from the old in the exact ratio of the depre- 
ciation of the paper currency. 



124 COMMON BENSE; OE, 



CHAPTER XY. 

Banks and banking. Deal in security. Deposit accounts. 
Drawing accounts. Clearing accounts. National bank 
ACT. Savings banks. 

203, Banking. — Money being adopted as the 
medium of exchange, all persons need to have some 
of it at command at all times, to enable tliem to 
supply their daily needs, while traders require, in 
addition, a provision against emergencies which may 
arise in the course of their business. 

The aggregate of these sums, small individually, 
amount collectively to a large value, which it is de- 
sirable to utihze. So long as the owners are obhged 
to keep these sums in their stores or dwellings, they 
are unproductive, and their owners are involved in 
constant anxiety, and exposed to great risk of loss. 

The want for security thus felt, the need of some 
one to whom these small sums could be confided, 
with the certainty that Ihey would be forthcoming 
on demand, gave birth to a class of traders known 
as bankers. The commodity in which they deal is 

SECURITY. 

206. The persons who leave their money with 



FIRST STSPS IN^ POLITICAL ECONOMY. 125 

bankers, (called the bankers' customers,) make their 
daily payments by drafts or checks — i. e., by writ- 
ten orders on the banker, requiring him to pay to 
the payee's order, or to bearer, the amount specified 
therein. Every such draft or check is a bill of ex- 
change. The moneys received by the customers of 
the bank in the course of their business are also 
lodged or deposited with the banker, and the banker 
strikes a daily balance of the amounts so deposited 
and withdrawn. The amount which is then found 
standing to the credit of his customer on the bank- 
er's books is termed the customer's balance. The 
account thus kept by the banker, upon which the 
customer draws for his daily wants, is called the 
customer's draiving account. Besides these ac- 
counts, it frequently happens that persons receive 
moneys which they intend to invest when an oppor- 
tunity occurs, and on which they desire to earn in- 
terest in the meantime. These moneys they gladly 
lend to a banker at interest, and the account thereof 
kept by the banker is the customer's deposit account. 
207. The majority of persons desire to maintain 
their drawing accounts as nearly as possible at the 
same amount. When the balance of these accounts, 
in the case of one class of persons, is drawn upon 
and reduced, it is generally found that those of other 



126 COMMON SENSE; OR, 

classes are in excess of their usual amounts. Expe- 
rience tlius shows that the passing away of the 
emergencies or exigencies of one class of a banker's 
customers, and the preparations they make for meet- 
ing future emergencies, generally balance the excep- 
tional withdrawals of others, and the two series of 
operations amount practically to little more than a 
transference of credits upon the books of the banker. 

It thus came to be perceived that the banker 
could, with perfect safety to his customers, lend out 
a large portion of the funds deposited with him, even 
though repayable by him on demand, and thus ob- 
tain a sufficient remuneration for his skill and labor 
in taking charge of his customers' moneys, without 
exacting any payment from them for doing so. The 
difference between a banker and other industrial 
workers, in the character of debtor, consists in this : 
what other traders owe thek creditors, the latter 
wish to use ; what the banker owes is what his cred- 
itors wish not to use. They hope never to have oc- 
casion to use it, but desire to be able to do so on the 
happening of any emergency requiring it. 

208. In Chapter XIV. some account was given of 
foreign and inland bills of exchange. "When a mer- 
chant, say A, who has sold goods on credit to, say 
B, perceives an opportunity for renewing his opera- 



FIRST STEPS m POLITICAL ECONOMY. 127 

tion, he takes B's note, or liis acceptance to a bill of 
exchange, to a banker, who, if lie approve of the se- 
curity, purchases or discounts it with part of the funds 
deposited with him by his customers, giving, or cred- 
• iting to, A the amount of the bill or note less the dis- 
count : t. e., the interest on the face amount of the 
bill to the day it becomes due is calculated at an 
agreed rate per cent, and deducted presently from the 
amount of the bill or note, and credit is given the 
customer for the balance. 

209. It is by discounting commercial bills that the 
banker is able to obtain interest on a part of the 
funds deposited with him, and as those bills are to 
be had of all dates and amounts, he can, by retain- 
ing the amounts paid to him day by day, instead of 
relending, provide against the decrease of his custo- 
mers' deposits. 

210. It is also by discounting commercial biUs 
that the transfer of capital from one trade to anoth- 
er, in accordance with the exigencies of the hour, is 
temporarily effected, the slack time of one trade be- 
ing ordinarily that of briskness in some other. 

211. Clearing Souse, — ^Until a comparative- 
ly recent date, each banker in cities used to send 
out a number of clerks to collect the claims he held 
against other bankers of his city, such as bills or 



128 COMMON SENSE; OR, 

notes discounted for, or deposited for collection by 
his customers, wliich falling due that day had been 
made payable at some other bank, or of checks or 
drafts upon some other bank, deposited with him 
for collection. This practice compelled each bank- 
er to keep cash or notes on hand to meet these 
claims, and he would often have to pay out large 
sums to a bank against which he had claims to a 
much larger amount. To prevent this, as also to 
diminish the risk from robbery and loss, occasioned 
by sending out these collection clerks, a " Clearing 
House " has been established in some of the most 
important commercial centres of the world. 

212. This " Clearing House " is an association of 
bankers, who meet once or twice a day for a mutual 
cancelling of drafts, in lieu of paying each draft ia 
money. 

213. Of all the clearing houses in the world, that 
of New Tork is, when the magnitude of its opera- 
tions is considered, the most perfect in its operation. 
During the month of June, 1876, the currency clear- 
ances amounted to $1,502,674,460.31 ; the daily av- 
erage was $57,795,171.55 ; and these were effected 
by an average daily movement of $3,055,708.75. 
Even of this three millions, little was actually paid. 
A depository has been estabhshed by the Associated 



FIBST STEPS Ilf POLITICAL ECONOMY. 129 

New Tork banks, with whom most of them make 
deposits, receiying certificates in exchange, and the 
balances represented by the above mentioned 
$3,055,708.75 were mostly settled with these certifi- 
cates. 

Up to the 1st July, 1876, the amount of the trans* 
actions of the N. Y. clearing house during a period 
of 22| years was $455,979,252,041.58, yet in all this 
vast deahng no error to the amount of a single cent 
remained undiscovered or uncorrected for a single 
day! 

214. The New York Clearing House Association is a 
purely voluntary one, its members have refused to 
encumber themselves with a charter, there is no hu- 
man law to which it can be made answerable, but 
its orders receive imphcit obedience, though the se- 
verest punishment any bank can sustain at its hands 
is to be expeUed from the clearing house ! 

The clearing house serves also as a check or tally 
upon the different bankers' account, very similar to 
that which a bank exercises for its customers. 

215. There has resulted from the clearing house 
system of New York, — and doubtless from those of 
other cities, — an advantage little anticipated by its 
founders. 

By the rules of the New York association, each 
6* 



130 COMMON- SENSE; OE. 

bank is bound to furnish to the manager a weekly- 
statement of affairs, for pubhcation. 

The statement required by the United States to 
be furnished by the national banks is often untrue ; 
when this is so, the falsehood can rarely be detect- 
ed until the bubble bursts, and the bank's insolven- 
cy is too apparent from other evidences for longer 
concealment. 

The statements furnished by the members of 
the New York Clearing House Association might al- 
so be untrue, but if so, the untruth would be self-de- 
tective. But further, the clearing house association 
furnishes a premonition of any weakness or mis- 
management on the part of its members. Suppose 
the weekly statement to show on the part of any 
bank a reserve of say $300,000, and that there 
should be balance debits on the three following days 
which should exhaust such reserve, if the fourth day 
should continue to show a debit of say $30,000, 
it is evident that the bank must, (save in certain 
cases,) borrow to meet it, evidence, (in all except the . 
exceptional cases,) of bad management. The com- 
mittee of the association then visits the bank ; if the 
bank be one which receives frequent remittances 
from abroad or from foreign banks, the position is a 
natural, normal, and, most probably, a proper one. 



FIRST STEPS IX POLITICAL ECONOMY. 131 

in any otlier case the bank is more or less involved. 
If on examining the bank's affairs, it is found 
to be perfectly solvent, its embarrassment the result 
only of slight errors of management, assistance will 
be afforded it ; but if insolvent, or hopelessly embar- 
rassed, it will be excluded from the association, and 
its career of mischief brought to a speedy close. 

216. One of the results which have flowed from 
this almost automatic disclosure of the condition of 
the various members of the New York Clearing House 
has been, that no member has ever been a loser, in the 
sHghtest degree, by the failure of another of its 
members. 

The members of the clearing house are thus re- 
leived from the perils of a run in the case of the fail- 
ure of another member, such as generally follows the 
failure of one bank, upon other banks doing business 
with it.* 

217. How infinitely to be preferred, how much 
more reliable, is the protection furnished to the com- 



* The facts given in. the text relating to the New York Clearing 
house, together with much other valuable information, were fnr- 
iiished to the author by Mr. Wm. A. Camp, manager of that ad- 
mirably conducted institution, to whom the author desires to 
render his grateful acknowledgements, as well as for the oppor- 
tunity furnished him on three occasions of witnessing the busi- 
ness of the clearing house while in course of being transacted. 



132 COMMON SENSE; OR, 

munity against the evils resulting from reckless 
banking, by tMs voluntary organization, tlian tlie 
Will-o-tlie-wliisp of legislative or government pro- 
tection ! 

218. Among the errors into •which nearly all gov- 
ernments have fallen has been that of attempting to 
control and direct the business of banking. 

219, JVational Banlz Act, — In a work so ele- 
mentary as the present, it would not be desirable to 
enter into any detailed account of the National Bank 
act of 1863, a bad copy of a bad original, viz. : Peel's 
Act regulating banking in England. It will be suffi- 
cient to point out the principal objections to it. 

(1.) As security for their notes, the banks are re- 
quired to deposit at "Washington, (t. e. out of their own 
control,) the very securities by the sale of which at 
times of need, pajonent of these notes and of their 
other obhgations would be possible. 

(2.) A fixed percentage is required to be held in 
reserve, and no new loans or discounts may be 
granted by a bank whose " reserve " has continued 
for twelve days below this j)ercentage. Now, as the 
only occasion on which, with due regard to the rules 
of prudent banking, the reserves would be liable to 
fall beloAv this limit are those when, by reason of 
the greater or less destruction of private credit, 



FIBST STEPS m POLITICAL ECONOMY. 133 

banking accommodation is in most demand, viz., in 
commercial crises, tlie natural cure for crises is de- 
nied to the commnnity, and we have in this provis- 
ion of the law a careful effort to convert every crisis 
into a panic. 

220. It can hardly be necessary to refer particu- 
larly to the class of banks called savings banks, 
they being subject in all particulars to the same 
natural laws as other banks. 

Their accounts, however, partake far more of the 
nature of deposit than of drawing accounts, and 
both for this reason, as well as on account of the 
excessive suffering and misery which the failure of 
such banks occasion, even more care is required to 
be exercised by the managers of such banks in the 
loans they grant and in the character of the securi- 
ties in which they invest the funds entrusted to their 
care, than in the case of ordinary banks. 

221. Carefully managed savings banks perform for 
smaU. savings the function which ordinary bankers 
perform for the larger deposits of their customers. 
The utility of 'the former however extends much 
further. Many of the amounts deposited with sav- 
ings banks would undoubtedly have been lost or 
squandered in the absence of some place of safe de- 
posit, and these banks therefore exert a power- 



134 C0MM02^ SENSE; OR, 

fill influence in inducing liabits of economy and 
thrift. 

222. Tiie amount of interest payable on such de- 
posits should be alwas a minor consideration. Se- 
curity is the first. It is to the accumlation of his 
savings, and not to the interest upon them, that the 
depositor should look for that provision against sick- 
ness and old age which is to prevent his becoming a 
burden on the community. 



•CHAPTEK XYI. 

Interest. Limits to. Market rates. Average rates. Usury 

LAWS. 

113. Interest. — In the analysis of profit one of 
its elements was foimd to be a reward for past absti- 
nence, or interest. Rates of interest and discount, 
(which is interest under a particular form,) vary 
greatly at different times in the same place, and at 
the same time in different places ; it will be interest- 
ing to investigate these phenomena and to ascertain 
the cause or causes of fluctuation in the rate of in- 
terest. 



FIRST STEPS m POLITICAL ECONOMY. I35 

224. Before entering upon this inquiry, it is neces- 
sary to caution the student against confounding capi- 
tal witli money. Wlien horroivers apply for a loan, 
what they really seeh to horrota is capital ; and wlien 
money is lent to them, the first step to earning a 
profit is to exchange the money for machinery, labor, 
or goods. But capital being measured in money, 
both borrowers and lenders speak of borrowing and 
lending so much money, and the interest for the use 
of CAPITAL is often inaccurately called the interest of 
money. 

This error is often carried still further, as, for 
example, when the rate of interest is high, money is 
said to be dear even though the prices of commodi- 
ties were unusually high, in which case money is 
lower in value than usual. So too the loan or capi- 
tal market is miscalled the money market, and 
various other forms of expression involving the same 
error are in common use. 

225. "With this caution, let us now suppose that a 
certain number of persons desirous of lending then: 
capital were to meet a number of others desirous of 
borrowing, and between them establish a certain rate 
of interest. 

If now the amount of capital desired to be 
borrowed should remain the same, and the capital 



136 COMMON SENSE', OR, 

the lenders are anxious to lend should increase, the 
latter will have to offer the increased capital to the 
borrows at a lower rate of interest, so as to induce 
the latter to borrow it, or to tempt additional bor- 
rowers into the market. In other words, the rate of 
interest would fall. As those owners of capital who 
have no means of employing it except on loan, would 
rather receive a very low rate of interest than none 
at aU, the rate of interest might fall to anything 
above nothing. If on the other hand, the increase 
were in the desires of the borrowers while the loan- 
able capital remained the same, the rate of interest 
would rise. No limit can be fixed to the rate of in- 
terest which ever^ honest and solvent traders might 
be willing to pay, rather than not obtain a loan of 
capital to enable them to fulfill pressing engage- 
ments. But such engagements frdfilled, new ones 
leading to like consequences would be avoided, be- 
cause the object of traders entering into engagements 
is to earn a profit, which object would be disap- 
pointed by the payment of unusually high rates of 
interest. 

226. As it is with a view to earning an additional 
profit, that administrators of capital add to the capi- 
tal they administer by loans from other capitalists, 
the interest they will agree to pay for the use of 



FIRST STEPS IN POLITICAL ECONOMY. 137 

sucli capital -will be less than tlie additional profit 
they expect to earn. If their calculations be correct - 
the interest will be paid out of such additional pro-, 
fit. If their calculations prove erroneous, or their, 
engagements imprudently contracted, the interest, 
"will exceed such additional profit, and either diminish 
the profits they would have earned, or perhaps even 
encroach upon their own capital. It is thus evi- 
dent that the average rate of interest prevailing in an 
industrial community miist he less than the average 
rate of profit. 

227. Hence it is evident that while the market 
rate of interest is regulated by the equation of the 
demand to the supply, modified as to each borrower 
by the nature of the security he is able to offer, and 
the degree of confidence his character inspu^es, the 
average rate of interest is governed hy the average rate 
of profit. In this country, where by reason of an 
indefinite extent of unappropriated land of great fer- 
tility, the return to labor and capital is large, the 
rate of interest must be high ; but where, as in most 
of the countries of Europe, the rate of profit is com- 
paratively low, the rate of interest will be low also. 
Hence both labor and capital have a constant ten- 
dency to flow from Europe to this country. This 
tendency is checked and weakened, especially as re- 



138 COMMON SENSE ; OR, 

garcls capital, byunpunctuality, dishonest j, and other 
untrustworthiness on the j)art of the individuals or of 
the people, and by unwise legislation. 

228. The higher rate of wages consequent on the 
smallness of the j)opulation compared with capital 
invites laborers from Europe, the greater produc- 
tiveness of their labor here causing also a higher rate 
of projSit, capital is also attracted hither. The mutual 
striving and competition among the administrators 
of capital to earn profit, prevents their securing to 
themselves the whole of the increased return to capi- 
tal, but compels them to share it with the laborers, 
with the owners of eligible lands, and with the own- 
ers of the capital they borrow, tending to increase 
the rates of wages, of rents, and of interest, and thus 
draw further labor and capital to this country. This 
competition among administrators of capital tends 
also to place capital in the hands of those who can 
administer it to the best advantage, because those 
who can afford to pay the highest rate of interest 
combined with the best security are they who will be 
able to obtaia the largest share of loanable capital. 
Their being able to offer the best security and to 
pay the highest rate of interest, depends on their 
being able to so administer the borrowed capital as 
to earn the largest profits, that is, to direct labor 
most productively. 



FIBST STEPS IN POLITICAL ECONOMY. X39 

229. The fresh instance of the harmony of natmre 
here displayed, is constantly being interrupted in 
many countries by foolish legislation, and in few 
respects more mischievously than by laws limiting 
the rate of interest which may be lawfully taken ; 
known as usury laws. 

The limit so fixed by law is in all cases some- 
what higher than the ordinary rate of interest estab- 
lished by the average rate of profit for ordinajy 
commercial risks in the community where such laws 
exist. This is evident, because were the lawful rate 
fixed, below, or even only equal to such rate of profit, 
it would put an end to all borrowing by law-abiding 
people, and the law itself would therefore soon be 
swept away. Being fixed above such ordinary rate, 
let us suppose a state of things to happen that the 
number of borrowers, or father the capital they seek 
to borrow is largely increased while the loanable 
capital remains unaltered. 

This arises either from a prospect of profit greatly 
exceeding the ordinary rate, or from a number of 
traders having miscalculated their prospects and 
entered into engagements out of proportion to their 
means to meet them. 

In the first case the operation of the law is to 
prevent these opportimities for earning an unusual 



140 COMMON SENSE; OR, 

profit from being taken advantage of, i. e., to prevent 
capital from being employed, in tlie most productive 
cliannels, and to force it into employment less pro- 
ductive. 

In tlie second case, persons ■who bave engagements 
to fulfiU are forced eitber to sell property tbey would 
bave preferred to beep, at a loss greatly exceeding 
tbe interest, bowever bigb wbicb tbey migbt bave 
bad to pay for tbe loan of tbe capital tbey need, or 
to become or declare tbemselves insolvent, witb all 
tbe loss and disgrace tbereon attendant. Usury 
laws are tbus seen to oppress most tbose wbom tbey 
profess to protect ! 

230. An analysis of interest sbows it to consist of 
tbree elements. 

(1.) Reward for tbe past abstinence exercised by 
tbe possessor. 

(2.) Eeward for tbe labor of effecting tbe loan. 

(3.) Insurance against tbe risk incurred of losing 
tbe capital. 

Tbe first and second fluctuate but sligbtly, and are 
governed by tbe average rate of profit ; tbe tbird is 
tbe element wbicb fluctuates most, as it is governed 
by all tbe elements of uncertainty in tbe transaction, 
sucb as tbe effects of bad laws or bad government, 
of untrustwortbiness, bad judgment, bad barvests, 
fires, tempests, etc., etc. 



FIRST STEFS IN POLITICAL ECONOMY. 141 



CHAPTER XVn. 

Paper MONE\. Advantages of. Inconvertable paper money. 
Effect of. Dishonesty of. Superior honesty displayed by 
THE French people over those of the United States. 

231,jPaper money. — The attentive strident may 
perhaps have experienced some surprise, accustomed 
as he will have been to associate in actual life the 
idea of money with certain pieces of printed paper, 
to find we have made so much progress in our inves- 
tigations into the phenomena of industrial life with- 
out making any reference to these pieces of paper 
which perform so many of the functions of money. 
It will be remembered, however, that we had made 
no httle progress, before it became necessary to touch 
upon the subject of money at all, and the time has 
now come when these pieces of paper, or papee money, 
may justly claim otir attention 

232. In considering the subject of credit, some 
instances were noticed in v\^hich credit supphed the 
place of money, economizing its use, and conse- 
quently diminishing the demand for it. Among 
these instances were book-credits, checks, bills and 
notes. The creditor to whom a check, bill, or note 



142 COMMON SEl^SE; OB, 

is given by his debtor, may transfer it to his creditor ; 
the latter to another, and so on to any extent ; when 
the single payment by the first debtor to the last 
holder of the check, biU or note at maturity wiU 
extinguish his own debt and those of all of the in- 
termediate debtors. Checks, bills of exchange, and 
promissory notes are paper money, economizing the 
use of metallic money, and thereby diminishing the 
demand for it. 

233. There is, however, a kiad of paper _Qoney in 
common use, which is more generally associated with 
the name of paper money than any other. 

This paper money is a promissory note pay- 
able, not to order, but to bearer on demand, and is 
called a bank note or bill because generally issued 
by some banking institution. It's essential features 
are, 1, A promise to pay, 2, to bearer on demand, 
3, a specified weight of gold or silver of given fine- 
ness in the form of coia. 

234. The dollar is a piece of metal composed of 
nine-tenths of gold and one-tenth of alloy weighing 
25.8 grains ; hence a note or bill which promises to 
pay a given number of dollars, is a promise to pay 
so many pieces of gold of the mint standard of fine- 
ness weighing each 25.8 grains. 

235. When the promise thus made is habitually and 



FIB8T STEPS IZV POLITICAL ECONOMY I43 

faitMully fulfilled, tlie coin and paper circulate to- 
getlier and are of equal value. They together form 
wliat is generally understood by tlie term currency, 
or, tlie currency of the comitry. 

Confidence being estabhshed by the habitual and 
faithful performance of the promises made, the note 
■will generally be preferred to coin, except for the 
discharge of balances due to foreign countries where 
the bills or notes are unknown and consequently, do 
not circulate as money. 

236. The preference given to the bills or notes is 
owing to their being less hable to be lost or stolen, 
or to depreciation in value by loss of weight. Be- 
sides that, the labor expended in counting and trans- 
porting is greatly lessened, and that of weighing 
saved altogether. 

So long as the paper money is actually exchanged 
for coin upon demand, its value will always corres- 
pond with the amount promised upon its face. So 
long, too, as its issue is not interfered with by legis- 
lative enactments, the quantity in circulation will 
be exactly what the community needs and no 
more. 

237. There is only one method by which a larger 
quantity could be forced into circulation, and that is 
by causing the paper to be inconvertahle as it is at 



144: COMMON SENSE; OR, 

present liere, and, (though to a less pernicious ex- 
tent) in France, Austria, Italy and Eussia. 

238. An inconvertible paper money is one which 
promises to pay so many dollars, or other denomi- 
nation of monay, but which promise is habitually 
disregarded by the promiser, while the law not only 
exonerates him from fulfilling his violated engage- 
ment, but compels all creditors to accept these vio- 
lated promises in discharge of debts owing to them. 

239. A spectacle more dishonoring to the intelli- 
gence and good faith of the community where it pre- 
vails can hardly be conceived, and its demorahzing 
influence on all classes can generally be traced. But 
where the party thus violating its engagements is it- 
self a government, shame and indignation must be 
the feelings of every honest mind able to discern the 
difference between truth and falsehood. 

240. The wrong thus perpetrated bears with es^ 
pecial severity on those who sell then- labor, wages 
being the last to share in the rise in prices which 
always follows the depreciation of the money of the 
country. 

241. Neither did our legal tender acts give to the 
Government the resources they were supposed to 
furnish. The Government wanted, not money, but 
men, and munitions of war, which it procured 



FIBST STEPS IN- POLITICAL ECONOMY. I45 

cHefly by means of its promises to pay. The men 
it hired had to be clothed, fed and educated for sol- 
diers, instead of being engaged in productive em- 
ployment. If the cost of such clothing, feeding, and 
education and munitions of war had been met by 
taxes judiciously levied, the consumption of the com- 
munity would have been diminished, and all would 
have borne their fair proportion of the burthen. 

But by giving in exchange only Government prom- 
ises to pay, nearly the whole amount of these sup- 
plies was abstracted from the capital of the country, 
and was thus a tax levied exclusively on those who 
sell their labor, the amount divisible among them as 
wages having been diminished by the food, clothing 
and other necessaries of life suppHed to the army 
and navy, and the quantity of the products of labor 
given in exchange for the munitions of war. 

The holders, too, of these promises to pay 
have a claim to the extent of their value on the en- 
tire production of the country, which must be again 
taxed for their redemption. 

242. Again, we have seen how enormously the 
productiveness of labor is increased by the division 
of labor and by interchange, the latter being indis- 
pensable on the institution of the former, while 
whatever facihtates interchange promotes and ex- 
7 



146 COMMON SENSE; OR, 

tends the division of labor. But to tamper with the 
measm-e of vakie is to disturb all industrial arrange- 
ments, impede and partially arrest interchange, and 
consequently diminish the productive powers of 
labor. 

243. Let us now trace the effect of the debase- 
ment of the paper money upon the Government in 
whose supposed interest it was effected. 

Let us suppose the Government to issue $300,- 
000,000 of legal tenders, as ours did, and the value 
to fall, as was the case, to 35 per cent, of its nominal 
amount. It is ti'ue that in such a case, while the 
Government remains bound by its promise to pay 
$300,000,000, it has received for it in commodities 
only such value as is represented by the value of its 
promises measured in the metallic standard at the 
date of each successive issue — i. c, the amount of 
gold which the depreciated paper will purchase, di- 
minished by the increase in prices occasioned by the 
general "briskness of trade," and by the anticipation 
of further depreciation of the paper. This last con- 
sideration is of great moment, and has hitherto been 
unobserved even by writers on the subject, but which 
we beheve really exceeds that of either of the others. 

The government which issues promises to pay 
to bearer, and does oud pay, thus forfeiting its 



FIRST STEPS IN POLITICAL EGONOMT. I47 

faitli, loses a considerable portion of its credit, the 
currency depreciating tlie more there is issued, the 
government needs to issue more and more with each 
successive issue, to procure only the same value as 
before. The temptation to continue such issue is so 
strong when the broad line of demarcation between 
good faith and dishonesty is once passed, that con- 
tractors with government have to take all these 
things into consideration, and to demand from the 
government, prices that shall yield them not merely 
the ordinary profit on their capital at the augmented 
rate of prices, but sufficient to compensate them also 
for the risk incurred lest the promise to pay $1,000 re- 
ceived by them from the government to-day may be 
worth less than $1,000, by any amount short of the 
whole, when the government I3ays them, not in dol- 
lars but in further promises to pay, which may have 
been in the interval yet further depreciated by fur- 
ther issues to any unknown amount. But the gov- 
ernmental loss does not end here ; the contractor 
who finds himseK disappointed of his just profits 
apphes himself to outwit the government which has 
wronged him. He suppUes inferior goods in fulfil- 
ment of his contracts, and to enable such goods to 
pass muster, offers temptations to the government 
officers to violate their duty. 



148 COMMON SENSE; OR, 

24A. The foregoing observations are illustrated 
and confirmed to a remarkable degree by tbe mod- 
ern financial liistorj of our own country. In Ma^^ 
1862, the depreciatian of the paper money was 3 per 
cent. ; in June, 9 per cent. ; in July, 15 per cent.; 
in September, 22 per cent. ; in October, 29 per cent. ; 
in December, 32 per cent. ; while in June, 1864, it 
was 65 per cent. ; or, as it was incorrectly called, gold 
stood at a premium of 185 per cent. In other 
words, the promise of the United States Government 
to pay one dallar was valued only at 35 cents, not- 
withstanding that such promise could be paid away 
by the holder in discharge of a debt of one dollar, 
even though his debt might have been contracted by 
him when the paper dollar was really equal in value 
to the gold ! 

245. The continual rise in prices, consequent on 
over issue, " stimulated trade," and, induced ex- 
cessive speculation, that is, encouraged the entering 
into engagements wholly unwarranted by the means 
possessed by those entering into them. In such a 
state of things, so long as prices continue to rise 
all goes well with the speculators, but the moment a 
stop is put to the printing presses, and means adopt- 
ed having in view the fulfillment of the j)romises is- 
sued in such profusion by, " contracting the cur- 



FIRi^T STEPS IX POLITICAL ECONOMY. \4Q 

rency," prices begin to fall. Tlie speculative dealer 
wlio liad embarked not only Ms own capital, but all 
he could borrow of otbers, first sees liis imaginary 
profits disappear, and according as lie misjudges 
tbe position or rightly appreciates it, he either 
endeavors to borrow, at greater and greater sacri- 
fices, on more and more onerous terms, to postpone 
the evil day of reaHzing his loss, but finally ag- 
gravating it ; or if of sounder judgment he reahzes 
at once, and holds his hands from further specula- 
tive purchases, knowing that as the process of 
"contraction," proceeds, prices must continue to 
fall as measured in a money, the value whereof 
continues to rise as the time for the redemp- 
tion of the public faith draws nearer. Hence a gen- 
eral "stagnation of trade," correlative to the former 
briskness. 

246. But as the money rate of wages was the last 
to follow the general rise in prices and ia fact never 
reached a full commensurate level ; so it is either 
the first to feel the fall, or its rise to the com- 
mensurate level is arrested, the stagnation of 
trade causing laborers to be at once thrown 
out of employment, and a general and real fall 
in wages follows. But this stagnation is aggra- 
vated by the uncertainty which a constantly varying 



150 COMMON SENSE; 07?, 

measure of values introduces into all industrial ar- 
rangements. Prudent persons limit their dealings 
to strict necessaries ; farmers, mine-owners, manu- 
facturers, stay their production, lest the prices real- 
ized should be insufficient to replace the cost of the 
wages of labor employed in jDroduction ; and pre- 
sent suffering is aggravated by the prospect of future 
want through the comparative arrest of production. 

But now healing nature provides the remedy for 
the evils and suffering resulting from the violation of 
her laws. The fall in price invites the attention of 
foreign traders, who may now perhaps rejsurchase 
here the very goods they had x^reviously sold as well 
as our own products, paying for them in coin or 
gold previously exported, thus smoothing the road 
to the redemption- of the public credit, and bringing 
to a term the general loss, 

247. Pending this process, however, heavy failures 
occur among those who had speculated beyond 
their means, often involving in their ruin compara- 
tively innocent and careful traders, distrust more or 
less general follows, credit and bills of exchange 
which have enabled so much money to be dispensed 
with are refused, thus still fui'ther reducing the 
quantity of the measure of value, occasioning a 
fui'ther fall in prices, renewed failures, increased dis- 



FIRST STEPS IN POLITICAL ECONOMY. I5I 

trust and what is called a commercial crisis. The 
Government is apt to be assailed by the reckless 
and ignorant or dishonest traders, to save them from 
the consequences of their own misconduct ; and as 
it was the errors of the Government which first en- 
couraged the excessive speculation, it is found diffi- 
cult to withstand the outcry of men rendered des- 
perate by their losses, and by the dread of further 
loss, but still able, if not altogether to control, pow- 
erfully to affect elections. The welfare of the great 
masses of the people, of those who sell their labor, 
and of the small capitalist, is too apt to be lost sight 
of, and the suspension of the attempt to re-enter the 
path of honesty is decreed ; or a paternal minister of 
finance steps in and by the re-issue of retired over- 
due promises to pay, to aid the "moving of the 
crops," impedes the progress towards redemption 
and honesty to the discomfiture of honest workers. 

248. The currency of the United States, irrespec- 
tive of commercial paper, may at the present time 
be regarded as consisting of three kinds : 

(1.) The gold dollar, used in all foreign exchanges, 
and in some instances of domestic trade. 

(2.) The United States legal tenders, or Treasury 
notes, commonly called greenbacks, as also the frac- 
tional currency ; for so great was the depreciation of 



152 COMMON SENSE; OR, 

the currency, that even copper cents became more 
valuable as copper than as coin, and were either 
melted down or hoarded ; — 

(3.) The new " trade dollar " and sUver currency 
marking fractional parts of the greenback " dollar ; " 
and 

(4.) The National bank currency. 

249. No effort should be spared for the redemp- 
tion of the National faith. 

The course which has been adopted by the 
French since the close of their causeless and disas- 
trous war with Prussia, reflects as much credit 
upon them as by contrast it serves to exhibit in 
more glaring colors the extent of our errors. 

FalHng, at an early stage of the war, into the same 
error which was committed by our Government, at 
the first moment of peace, measures were inaugurated 
having in view the redemption of the pubhc faith, 
and notwithstanding the enormous cost of the war, 
and of the fine exacted by Germany, they have taken 
such effectual steps towards resumption, that the de- 
preciation of their currency has disappeared. 

This has been done under difficulties compared 
with which ours have been as nothing, while they have 
enjoyed but few such magnificent resources as those 
with which nature has blest this country and people. 



FIRST STEPS IN POLITICAL ECONOMY. I53 

250. Besides redeeming tlie national faith, aU. in- 
terference, whether by the National or by State 
governments, with the business of banking, as with 
other trades, should be absolutely prohibited. 

Our own financial and banking history is fraught 
with illustrations of the pernicious consequences of 
government interference, and the benefits which flow 
immediately upon its cessation or diminution. 



CHAPTEE XYIII. 

Commercial crises and panics. Their causes. Aggravated 

BY usury laws and GOVERNMENT INTERFERENCE. HoW TO BE 
PREVENTED. 

231, Crises and Panics. — When a large num- 
ber of persons are unable to pay their debts, and a 
still larger number have great difficulty in doing so, 
a state of things exists in the loan or capital market 
to which the term CEisis or commercial crisis is ap- 
plied. When the number of those who are unable 
to fulfill their engagements is so large that credit 
almost disappears and confidence is replaced by an 
almost universal mistrust, then a panic is said to 
exist. 

I* 



154 COMMON SENSE; OR, 

If all persons observed tlie rule evolved in 
Chapter XIII., of never accepting credit save wlien 
they possessed a reasonable prospect of discharging 
their obligations at the time appointed, neither crisis 
nor panic could occur. 

252. If now we suppose merchants, manufactur- 
ers, and bankers to have taken credit, and either 
fi'om want of judgment or unscrupulousness in un- 
dertaking engagements, or from mismanagement of 
the means at their disj)osal, to be unable to fulfill all 
their engagements ; loss is inflicted on aU who trusted 
them, laborers and other persons in their employ are 
discharged, and frequently suffer great deprivations 
while the failure of a bank entails so much loss and 
confusion upon its customers as generally to occa- 
sion also the failure of all but the very prudent and 
cautious among them. 

When, in addition, engagements have been enter- 
ed into for the supply of capital for joint stock enter- 
prises, such as the construction of railroads, bridges, 
ships, docks, piers, warehouses, and the Hke, not 
only may these operations be arrested but the con- 
tractor for them may be ruined and the laborers he 
employed be also displaced. 

253. The hability to be thus displaced furnishes 
a fresh reason for economy on the part of tlie labor- 



FIBST 8TI:PS m POLITICAL ECONOMY. I55 

ers, in order that tlie industrial derangement in 
■which they may thus chance to be entangled may 
neither find nor leave them destitute of resources. 

254. Such failures as above mentioned always 
involve the dishonor of bills of exchange, and prom- 
issory notes, and as it is chiefly in the purchase or 
discount of these securities that the loan market is 
engaged, the consequences of a single failure up to 
a general suspension of payment should be inquired 
into. 

255. A single failure, unless of great magnitude, 
does not effect very much mischief. The immediate 
creditors of the insolvent suffer loss, but it faUs 
within the margin allowed for by the lenders of 
capital. It diminishes their profits and consequently 
lessens the return to labor and productiveness of it. 
It tends to diminish confidence and lower the general 
tone of morahty, but there the mischief ends. If 
the failure is on a large scale, or failures are numer- 
ous and in rapid succession, a general want of confi- 
dence is produced. CapitaUsts hesitate more than 
ever whom to trust ; and they who depend upon 
the opportunities for borrowing which they had 
previously enjoyed for the means of fuMlling 
their' engagements, are generally obliged to stop 
payment. 



156 COMMON SENSE ,- OR, 

256. An illustration of the rise and progress of a 
commeacial crisis will render the cause of these in- 
dustrial disturbances more apparent. 

Let us suppose the stock of cotton cloth had 
been considerably diminished, and that some New 
York merchants observing the fact, had contracted 
with some mill owners of New England for all the 
cotton cloth which the means and credit at their 
command would enable them to purchase. 

They sell these goods at a large profit and imme- 
diately repeat their orders. Other capitaHsts ob- 
serving their success, imitate them, and orders pour 
into New England faster than the mills in operation 
can supply them. 

To pay for the goods thus ordered, the merchants 
embark all the money and pledge all the credit they 
can command. So long as the orders are unexecu- 
ted, so long that is, as the supply continues low, the 
increased orders lead to enhanced prices, and all 
goes merrily along. But in their eagerness for profit, 
the merchants have noticed only the rise in prices 
and failed to notice the immense increase in orders 
and manufacturing appliances. The goods arrive, 
and what is called a "glut" is foimd in the market. 
The expected profits disappear, and prices fall to 
such a level that the salerof the goods fails to pro- 



FIRST STEPS IN POLITICAL ECONOHIY. I57 

vide funds even to meet the engagements entered in- 
to. At tliis time we shall be told there is " a tight- 
ness in the money market" and an additional issue 
of legal tenders will be clamored for ; or the banks 
will be upbraided for extortion or usury because 
(where the law has not unwisely interfered to pre- 
vent their so doing,) they seek to arrest the evil by 
refusing to lend except at such rates of interest as 
shall afford them an insurance against the increased 
risk of loss which has grown out of or been conse- 
quent upon unsafe trading, and shall at the same 
time diminish or Hmit the demand for capital, to an 
equation with the supply. 

257. "When the legislature has been guilty of the 
folly of depriving commerce of one of its chief natu- 
ral indicators of impending disaster, (as by hmiting 
the rate of interest to be lawfully taken,) the banks 
are compelled to protect themselves by a more per- 
emptory hmitation of their loans, the law thus de- 
priving the banks of their insurance, and the pubHc 
of that bank aid which would prevent a crisis from 
becoming a panic. 

258. The entering into transactions out of propor- 
tion to the capital possessed by the speculators is 
now seen to be the prime cause of a Crisis. 

Legislative interference with the rate of in- 



158 COMMON SENSE; OR, 

terest or with the busmess of banking, as in the 
Onited States and in Great Britain, is the cause 
which most frequently converts a crisis into a panic, 
though a wide spread prevalence of the overtrading 
above illustrated, might be sufficient to occasion it 
even in the absence of such legislation, 

259. The destruction of credit has a two-fold effect 
upon the currency, it diminishes the supply of the 
substitutes for money and increases the demand for 
it. 

That portion of credit such as bills of exchange, 
promissory notes, and cross accounts, which were 
really substitutes for money, having disappeared, the 
supply of money is in effect diminished. Further, the 
disappearance of that portion of credit wliich post- 
poned the demand by "changing the office of money 
"from that of transferring the ownership of the pro- 
"perty or commodities sold to that of hquidating the 
" obligations which represent them " causes a demand, 
which would have existed in the future only, to be 
immediate and pressing. Hence a sudden and enor- 
mous fall in prices. 

260. It is at such times that the e-sols of legislative 
interference are most severely felt. One of the chief 
substitutes for money, — credit, — at least private 
credit, being in a great 'measure annihilated, the 



FIRST STEPS IN POLmCAL ECONOMY. 159 

banks are the only available resource, and their is- 
sues should now be largely increased through the 
liberal discounting of well secured commercial 
paper limited by charging high rates of interest. 
This is forbidden to the banks in many of the 
States by usury lawis, while in the case of the na- 
tional banks such aid is prohibited by the laws as 
to their reserves, which compel the banks to restrict 
their loans at the very times they are most needed 
by the public. 

261. The conclusions to which we are forced are, 
that commercial crises have for their sole cause the 
abuse of credit resulting from ignorance and ivant of 
honesty, and the evils of this abuse of credit are intensi- 
fied by legislative interference. 

262. The remedy is apparent ; good teaching and 
training in youth in order that honesty, knowledge, 
and skill may take the place of dishonesty and igno- 
rance among traders, and that enlightened legislators 
may undo the folhes of their predecessors. 

Of this, good teaching, instruction in the condi- 
tions of human well-being and in the phenomena of 
social and industrial life is an essential element. 



160 COMMON SENSE ', OB, 



CHAPTER XIX. 

Foreign commerce. Protection to native industry. "Pau- 
per LABOR of Europe " considered. Evil results of the 

TARIFF ON NATIVE INDUSTRY. 

263, Foreign coimnerce, — Tlie liarmonies 
which have been seen to exist between the interests 
of each individual and of society have developed in 
proportion as man was left free to seek his own wel- 
fare in his own way. Instances have occurred and 
been examined in which the action of the legisla- 
ture has interfered with such liberty under the im- 
pression or pretence that the legislature could more 
wisely direct man's efforts for his well being than he 
could himseK. So far as wo have examined such 
cases, the results of all such legislative action has 
been most pernicious, arresting the progress of pro- 
duction, — forcing labor fi'om more productive chan- 
nels of employment into such as are less so, aggra- 
vating periods of deprivation or of diminished en- 
joyment into positive distress, scarcity into fam- 
ine, and commercial crises into panics. The actual 
state of our civilization renders it necessary to ex- 
amine the effects of legislative interference in an- 
other direction from those hitherto investigated. 



FIRST STEPS IN POLITICAL ECONOIfT. 16X 

264. In tlie growth and progress of tlie division 
of labor different industries were found to be best 
adapted to different countries and to different parts 
of tlie same country tlie inliabitants whereof devoted 
themselves to the production of the commodity for 
which they possessed special facihties as the readi- 
est means of obtaining the other things they desired. 
Labor being thus rendered more productive the en- 
joyments of all were iucreased. The distances be- 
tween the producers and the consumers of the va- 
rious articles, and the cost of transport of commodi- 
ties from the places of production to the places of 
consumption formed serious drawbacks to this dis- 
tribution of industry, which only the immense in- 
crease to the productiveness of labor occasioned by 
it, could overcome. 

265. These drawbacks have been sought to be 
diminished by improving the means of intercom- 
munication. 

Not to mention the earliest stages of progress, — 
turnpike roads superseded the old highways, chpper- 
built ships took the place of Dutch and Spanish 
galleons, and finally the locomotive and the steam 
vessel have almost supplanted the turnpike and the 
sailing ship, while the electric telegraph instanta- 
neously communicates the wants and desires of one 



162 COMMON SENSE; OR, 

part of tlie globe to another, adding enormously to 
the productiveness of men's labor. 

266, For anything that has thus far appeared, the 
division of labor and the interchange of commodi- 
ties are not more to the interest of one people or 
class of producers than to that of any other. 

The interests of California, have in this respect at 
least, seemed to be identical with those of Mexico ; 
those of Maine, and Louisiana with those of Lanca- 
shire and Yorksliire in England; of Pennsylvania 
with those of the black country (England), and of 
Wales ; Nevada with Mexico, Utah, and China with 
Italy and France. In short, left to the operation 
of the workings of man's nature, the whole civilized 
world becomes one country, having harmonious in- 
terests, and one common to all, viz. : to carry to its 
furthest possible development the division of labor, 
and to this end to diminish to the utmost the ob- 
stacles to interchange. 

267. But with this harmony of nature, the legis- 
latures of various countries have been induced to 
interfere. Unquestionably, the law of seK-preserva- 
tion is the highest law, and if it can be shown that 
the weKare of the individuals composing any com- 
munity requires this legislative interference, all ob- 
jections to it must disappear so far as regards that 
particular community. 



FIBST STEPS /A" POLITICAL ECONOMY. X63 

268. All nations liave desired to improve and 
cheapen the means of communication and of trans- 
port : — When by the aid of such improved means of 
transport, commodities have been brought to the 
doors of willing purchasers, ought they to be forced 
by penalties in the shape of customs duties, to pur- 
chase in then- stead commodities which have been 
produced at home at a greater cost of labor than 
was necessary to procure them by exchange ? 

269. Such is the question involved in every pro- 
posal to impose duties on the importation of foreign 
produce for the encouragement of home industry. 

270 It certainly seems, at first blush, that it would 
have been far wiser to have abstained from expend- 
ing so much labor and capital on the making of 
roads and otherwise facilitating interchange, if when 
about to use the means thus provided, impediments 
to then- use are to be put in the way. More logical 
would it be to destroy the railroads, sink the ships, 
cut the wires of the telegraph, than to suffer them to 
be used to bring commodities to their destined port 
and there seek to arrest their entry to the homes of 
those who desire to enjoy them. 

Left to themselves, the directors and admin- 
istrators of labor and capital, employ that labor and 
capital in the mode in which they think most likely 



164 COMMON SENSE; OR, 

to produce the largest profit. As they do this at 
their own risk, it is strange that legislators, on 
whom devolve none of the responsibilities of failure 
or risk of loss, should think that they are benefitting 
the community by forcing or inviting the adminis- 
trators of capital to abandon the path selected by 
them as the one in which, in their judgment, most 
profit is to be earned, that is in which labor would 
be most productively employed, to enter upon 
another dictated by the legislature. 

271. The nature of the trade between different 
countries and between different parts of the same 
country, when left to itself, depends upon the rela- 
tive superiority one locality has over another in some 
special branch of industry. This local superiority is 
owing, sometimes to differences of soil, chmate, mine- 
ral productions, or geographical position, sometimes 
to differences in the character, temper and education 
of the people, sometimes to priority of invention or 
investment, sometimes to the density of population ; 
or to a combination of any or all of these conditions. 

272. In the more densely peopled countries, arti- 
cles of food and commodities intended to enter into 
the manufacture of other commodities and which are 
usually termed raw materials, are in general com- 
paratively difficult of production, but are readily and 



FIRST STEPS IN POLITICAL ECONOMY. JgS 

clieaply transformed into manufactured articles. In 
tlie less thickly peopled countries on tlie other hand, 
the production of food and raw materials is generally 
easy, their transformation into manufactured com- 
modities more difficult. Left to themselves the peo- 
ple of this country, except in its more thickly peo- 
pled parts would devote themselves mainly to 
agricultural and mining industries and to the in- 
vention and production of labor-saving ma- 
chines ; and with these products of their in- 
dustry, skill and capital would procure elsewhere 
most of the manufactured articles they desire. 
Even in the face of the restrictions and burthens 
with which Congress has trammelled commerce, this 
natural course of trade goes on to a very great extent 
as will be seen at once by examination of the ex- 
ports and imports of the country during any period 
of time. 

Admitting the government should protect the 
producer from being compelled to part with the 
fruits of his industry without obtaining what he de- 
sires in exchange, it would be strange, indeed, to 
conclude that government should under the plea of 
"protection" impose restraints upon this freedom, 
and inflict upon him a penalty whenever he sought 
to exchange his product for certain other commodities 



1(36 COMMOy SEXSE; OR, 

273. The crj for " Protection to native industry " 
has arisen in this country in this wise. 

Some one, the owner suppose of land in Pennsyl- 
vania, discovers a A^ein of rich iron ore runnmg 
through his land, with seams of coal contiguous 
thereto. He proposes at once to dig into the earth, 
extract the ore, roast and smelt it and sell the pro- 
duct. 

He finds on calculating the cost of mining, roast- 
ing, and smelting the ores and adding thereto the 
average rate of profit prevailing in Pennsylvania, 
that by the time he brings it to the shop of the ma- 
chinist, its cost to him will be higher than that at 
which iron carried all the way from Great Britain or 
Sweden is being sold. He goes to Washington and 
says to Congress, " See ! here is iron ore in abund- 
ance, biit it cannot be worked because owing to the 
high price of labor, we cannot compete with the 
pauper labor of Europe ; but if you will tkotect na- 
tive INDUSTRY by imposing a duty upon all iron im- 
ported, employment wiU be afforded to a large num- 
ber of laborers, and we shall be independent of 
England and her pauper laborers." 

274. As the foregoing argument is that which has 
been and is now actually and repeatedly employed, 
it is necessary to guard the student against hav- 



FIBST STEPS Ilf POLITICAL ECONOMY. 167 

ing liis judgment warped by prejudice. Honest 
industry must even feel dislike for paupers, even 
though it; may pity them. But the term "pau- 
per labor " is a verbal contradiction hke the expres- 
sion "honest deceit," "pious fraud," and the like, 
with -which judgment is not rarely led captive in the 
chains of prejudice. 

275. Now the first thing which strikes the student 
in examining this " peotection to native industky " 
is, that whereas the farmer had, before the imposi- 
tion of the tax, produced the iron he required by 
exchanging his corn :^r iron from England, Sweden, 
and Sardinia, he is now forcibly prevented from do- 
ing so. If he could have obtained more iron for his 
corn and flour by exchanging it for hon, mined and 
smelted here, he would have gladly done so ; he only 
resorted to foreign iron, because he thereby obtained 
MOEE for his labor embodied in his corn and flour. 
Has his labor been protected ? Has he not on the 
contrary been deprived of a portion of the produce 
of his toil, and that portion handed over, against his 
will, to the American iron-master ? And has not 
that iron-master been induced by the tax thus levied 
upon the rest of the community and handed over to 
him, to administer his capital in the employment of 
labor less productively than he would otherwise have 



163 COMMON SENSE; OR, 

done ? When to tliis is added the taking an army 
of men from productive employment to be employed 
as custom house officers, spies, and informers, can we 
any longer doubt the mischief, loss, and demoraliza- 
tion this supposed " protection " entails upon the 
community. 

The main reason why the iron-master here 
may not be able to compete with the English or 
Swedish iron-master is, that owing to the almost 
boundless extent of fertile land still unappropriated, 
labor applied to the land in this country is far more 
productive than when emj)loye^ in transforming raw 
materials into manufactured commodities. 

276. To talk of the labor of Europe as pauper la- 
bor because the toiling millions of Euroj)e are less 
fortunate in the remuneration they receive for their 
labor than their co-workers here, is not only unkind ; 
it is untrue. 

The pauper is one who hves wholly or partly 
on the industry of others without giving any ade- 
quate return ; his own labor, if he labor at all, not 
being sufficiently productive to support him. 

The laborers of Europe Hve on the products 
of their owa industry unsupported by charity or by 
wealth taken from others. The u'on-master of 
Pennsylvania and the cotton spinner ef Lowell, 



FIRST STEPS m POLITICAL ECONOMY. IQQ 

though rolling in wealth, are paupers, because they 
require a bounty to be paid to them by the com- 
munity, expressly on the ground, (disguised, it is 
true, by the use of ambiguous terms,) that their own 
labor is not sufficiently productive to support them 
without such tax ! 

277. The absurdity of the assertion that the civi- 
lized farmer of Iowa, Ohio, or Illinois cannot com- 
pete with the nearly savage Boer or Kaffir of Africa 
would be too great to need notice, but for the fact 
of its being persistently maintained, though also 
disguised beneath a cloud of words. 

Thanks to the advantage afforded him by his 
climate, the Kaffir raises on the hills of Southern 
Africa wool which to him is useless. He gladly ex- 
changes it for flour, cheese and other comforts 
hitherto unknown to him, and which he now begins 
to look upon as necessaries. 

Europe and America take from him the wool, and 
give him wheat or maize in exchange. In so doing, 
they obtain for a day's labor on wheat or maize wool 
which would have cost them from three to fifteen 
days' labor to produce directly. The savage took 
a step in civilization and obtained what he could not 
have raised at all. Ohio, Illinois and Iowa can 
raise wool, but while, owing to the warmer and 
8 



170 COMMON SENSE ; OR, 

dryer climate of South Africa, the sheep raised there 
need no protection from the weather, in Iowa, Ohio, 
and Ilhnois, stalls, pens and other enclosures must 
be provided for them ; hay and roots must be raised 
to feed them, anfl. a civihzed man must spend from 
two to eight days' labor where the half-savage Kaffir 
need spend but one. And the civihzed man needs 
to be " protected" against these beginnings of honest 
industry of the savage ! 

278. The pretence that "protection" is needed 
because of the heavy taxation under which a joeople 
labors is equally absurd. To increase taxes is cer- 
tainly an odd way of j^roceeding to hghten the bur- 
then of taxation. The attempt, by means of a tariflf, 
to throw the burthen upon foreigners, is entirely 
futile. 

279. Suppose that by reason of the tariff it be- 
comes profitable to employ capital and labor in a 
branch of industry theretofore supplied by importa- 
tion. On the amount now produced at home no 
portion of the tariff tax can be paid by the foreigner. 
Government gets nothing in respect thereof, but the 
community pays the tax on the entire quantity pro- 
duced at home, as a bribe to the few persons who 
embark in the trade to induce them to do so. 

Let us now suppose some of the taxed com- 



FIRST STSPS IN POLITICAL ECONOMY YI\ 

modities to be imported. Tlie foreigner lias tlie 
markets of the whole world open to him. He will 
not consent to sell to the tariff-ridden community 
cheaper than to any one else. If the previous de- 
mand of the country, now punishing itself with a 
tariff, formed any considerable proportion of the 
total demand, he would diminish his production of 
that particular article, disposing of his stock on 
hand at a cheaper rate to the rest of the world while 
the tariff-ridden community would pay not less 
than the reduced price to the importer, plus the 
total amount of the tax and of the additional ex- 
pense and labor it occasions. The foreign producer 
would then direct his labor and capital, set free by 
reducing his production, into some other channel 
until, by reason of the diminished supply, prices rise 
sufficiently to compensate him. 

Of the total loss to the commercial world occa- 
sioned by the diminished productiveness of labor, 
the foreigner bears in the long run, that proportion 
which his purchases from the tariff-ridden commu- 
nity bear to their entire production, leaving them 
to bear a loss greatly exceeding the entire produce 
of the tax. 

280. It is strange to observe that the cry for "pro- 
tection" on account of heavy taxation is raised 



172 COMMON SENSE; OR, 

chiefly against the production of that nation, (Eng- 
land,) which until the recent Franco-Prussian war 
raised the largest revenue in proportion to her pop- 
ulation of any nation in the world. 

281. But the cry that "protection" by customs 
duties is necessary in consequence of the loAver wages, 
lower rents, and lower taxes of other nations implies 
yet another contradiction. It assumes that the 
more civilized a people the less they can be trusted 
by their government with their own concerns, and 
the less are they able to "compete" with people who 
are less civilized. If wages are high it must be be- 
cause labor is highly productive.* If taxes are high 
among a people who themselves determine the 
amount of their taxation, it is because the ramifi- 
cations of the government are greatly extended and 
the people believe they have an equivalent in efii- 
cient protection to person and property, the education 
of the people and so forth. If, as is most probably 
the case, this belief is erroneous, the governmental 
expenditui'6 whether federal, state or local, is, in ef- 
fect so much taken from the productiveness of labor, 
the remedy for which is greater enlightment of the 
people to provoke them to remove the burthen of 
such taxation. K-ents on the other hand can only 

* I. e., Beal wages as distinguished from money wages. 



FIRST STEPS IN' POLITICAL ECONOMY. I73 

be higli wliere the progress of civilization lias per- 
mitted tlie aggregation of a dense population. 

282. It is also alleged that by the imposition of 
the tax upon the imported commodity, say stone- 
wares or iron, employment will be given to a large 
number of laborers, and it is implied that this is a 
good thing. It will hardly be contended that to em- 
ploy a number of laborers to dig holes in the ground 
and then to fill them up agam, would be a good thing, 
yet the two cases are precisely parallel. The capital 
which a tax on iron or stoneware imported into this 
country induces the owners to employ in pottery or 
iron mining and smelting, must have been trans- 
ferred from some other employment in which, at 
least a like number of laborers had been employed, 
who, by this transfer, lose their occupations. If the 
loss be spread over the whole body of laborers, 
wages are diminished. If the capital now bribed to 
enter into pottery, iron-mining or smelting, were not 
so employed, it would seek employment elsewhere, 
and give employment to at least an equal number of 
laborers or increased wages to others. But fur- 
ther, by the hypothesis, that if left to itself, 
capital would not seek the "protected trade," 
i. e., not unless it be "protected," it must be be- 
cause, in the opinion of those most competent to 



174 COMMON SENSE; OR, 

judge, tlie labor it engages and pays would j'ield a 
larger return in some other industry. The difference 
between the yield of labor thus misdirected, and of 
what it would produce if directed by a capitalist 
ixuder a system of freedom and individual responsi- 
bility, is so much abstracted from the future capital 
of the country. It is equivalent to a 'perpetual tax 
upon the wages of the present and of every genera- 
tion of future laborers, in addition to the tax paid 
by the jDresent generation in their character of con- 
sumers of the commodity produced at the enhanced 
cost. 

283. Add to all this the cost of officials to collect 
the duty, to detect smuggling, of the honest laborers 
lost to the community and converted into criminals 
by laws which make innocent actions into crimes, 
the hosts of spies and informers created by such 
laws, the treachery and mistrust which they reward 
and disseminate, and astonishment struggles with 
indignation to see a people so completely masters of 
their pohtical actions as are the citizens of the 
United States imposing upon themselves a yoke so 
grievous and so demoralizing as a Tariff. 

284. Some striking illustrations of the heavy bur- 
then upon American industry imposed by this pre- 
tended protection have recently fallen under the au- 
thor's notice. 



FIRST STEPS IN POLITICAL ECONOMY. I75 

In order tliat mining may be conducted with 
knowledge and skill, frequent assays of the earths met 
with in sinking a shaft are neecessary ; — an assay 
for gold, silver, lead, or copper in Colorado costs 
from $2.50 to $5.00, and is so serious a tax upon the 
miner, that not anything Hke the number of assays 
can be afforded by him as ought to be made to guide 
his labors. In Germany the cost of such assays is 
60 pfennings, or 122 cents. 

If it be said the reason of the difference lies in 
the higher wages of the laborer, the answer is un- 
true, for though the money wages of skilled labor are 
higher in the United States than in Europe, its real 
wages are lower, in consequence of the tariff. A 
suit of clothes will cost a skilled artisan in the 
United States from six to eight days labor. The 
skilled artisan of Europe will procure the same 
clothes for from three to four days labor. 

Unwise legislation has not yet succeeded in en- 
tirely counter-balancing those natural advantages 
which tend to render labor so much more produc- 
tive in this country than in Europe, so far as un- 
skilled labor is concerned, and there thus still'exists 
considerabfe inducement for unskilled laborers to 
flock to our shores. 

285. Among the articles employed by the assayer, 



176 COMMON SENSE ; OR, 

the " scorifier " is used in large quantities. These 
cost in Germany 1^ pfennings each, or 8 for 3 cents. 
They cost in Denver 3 to 4 cents each. The assayer 
in Germany never uses the same scorij&er twice ; his 
Colorado brother often does so, at considerable risk 
of having an inaccurate assay. The duty is 40 per 
cent, ad valorem and 50 cts. per lb, making together, 
more than 100 per cent. 

Common salt is essential to the chlorinization pro- 
cess in the reduction of ores ; its enormous cost, 
owing to the duty, renders its use on a large scale 
imj)racticable. 

286. If the duty on articles used in assaying were 
removed, the cost of an assay might be reduced to 
about 75 cents to $1. If the duty on all articles 
used in reducing ores were removed, mines now ab- 
solutely worthless would be highly profitable. 

287. Quite recently a number of capitahsts con- 
templated the establishment of reducing works in 
Colorado which would have given employment to 
about 2,000 men and boys. 

On estimating the cost of the necessary plant, ma- 
chinery, materials, and the money rate of wages, it was 
found that it would be more profitable to ship the 
ores over 5,500 miles to be treated in Germany ! 

288. If the duty on plant, machinery and materials 



FIRST 8TJEPS IN POLITICAL ECONOMY, I77 

to be used in reducing ores, and upon clotlies and 
otlier articles to be consumed by the employes in 
sucli works were removed, tbe works would be at 
once put up, direct employment would be given to 
2,000 men and boys in Colorado, and tlie whole trade 
and industry of the country would be proportion- 
ately stimulated. 

289. By the serious fluctuations in price occasion- 
ed by the tariff, scarcity, in countries which do not 
produce grain, is converted into famine. The most 
striking illustration of this truth is furnished by the 
too celebrated Irish famine of 1846-7. 

But for the tariff-laws which then existed in 
Great Britain, the markets of the whole world would 
have been open to, and prepared to supply the fail- 
ure of the potato crop in Ireland, and no such disas- 
ter would have followed as then swept away nearly 
one-third of the inhabitants of that country, leaving 
large numbers weakened and diseased to hand down 
enfeebled frames and sickly constitutions to their 
offspring. 

290. In a table published in " The Exchange," 
New York, 1870, will be found the highest, lowest, 
and average prices of breadstuffs in England for each 
year for the quarter of a centiu^y prior and subse- 
quent to the famine, and repeal of the British tariff 



178 COMMON SENSE; OB, 

on grain. The contrast between the extremes of 
prices in the former period and the very shght fluc- 
tuations of the latter are most striking. Failures of 
the crops in Great Britain have since occurred to 
even a greater extent than in 1846-7, producing dis- 
tress and suffering it is true — ^but never a famine. 



CHAPTER XX. 

Knowledge acquired by the attentive student. His future 

HAPPINESS dependent ON HIS OWN CONDUCT. INDIVIDUAL SUC- 
CESS dependent ON SERVICES RENDERED. CaUSE OF OCCASIONAL 

EXCEPTIONS. Canon of good and evil. 

291. The student by whom the foregoing pages 
shall have been studied will be prepared to enter 
upon the battle of life forewarned of some of the 
difficulties which have beset his less fortunate pre- 
decessors. But he must not suppose he has mas- 
tered the science of human well-being. He stands 
only ujDon the threshhold of the temple of knowl- 
edge, having learned just enough to enable him to 
penetrate further mthin her portals. 

292. One all important knowledge he ^ill however 



FIRST STEPS IN POLITICAL ECONOMY. I79 

have acquired. He cannot fail to have learned tliat 
liisfidure success and happiness loill depend on his own 
efforts and conduct, and to look npon each instance of 
failure on his part, as a consequence of some error 
in judgment or conduct of his own. Happy indeed 
for him that this is so. His own conduct he wiD. be 
able to control in the future, and so prevent a recur- 
rence of like failure. Were failure or success depen- 
dent, not on one's own conduct, but on that of others, 
miserable indeed would be the lot of man. 

293. Happily the harmonies of social life render 
individual success dependent on the services ren- 
dered by the indi\'idual to society at the same time 
that they leave him master of his own future. Oc- 
casional, (and sometimes dazzling,) instances are met 
with of success which has seemed to violate the laws 
of conduct we have evolved. Occasionally we find 
crime meeting not merely with temporary success, 
but crowned with a false glory calculated to tempt 
the weak and to subvert all notions of right and 
wrong. Occasionally too, we find instances of hero- 
ism and virtue overwhelmed with misfortune. 

But these instances of criminal success, or of good 
men suffering unmerited misfortime, need have no 
efi^ect to weaken our confidence in the rules of con- 
duct herein estabhshed. The causes of such sue- 



180 COMMON SENSE; OR, 

cess or of sucli misfortune will always be easily 
discovered in the ignorance or lack of honesty pre- 
vailing among the people in whose midst they occur. 

In our own country, when we trace the career of 
these vicious men, we find their successes, even the 
most dazzling, to be but ephemeral. 

Pursuing their evil courses the more persistently 
for their success, sooner or later detection and pun- 
ishment fall upon them ; while the continual dread 
of detection has, of itself, been a heavy punishment 
from which they could never set themselves free. 

293. Before taking leave of the pupil, it will be 
well to try and determine some rule or canon by 
which to recognize good and evil, some measure by 
which to determine the character of all human acts 
and conduct. Such a rule can readily be determined 
by a reference to what has been already learned. 

294. "Why did we find it to be a good thing that 
men should be honest and truthful ? Why industri- 
ous, saving, skillful, sober, obliging and well man- 
nered? It was because these quahties were found 
to promote the haj)piness of all, and particularly of 
the individual practising these virtues. 

For the opposite reason we learned it would be 
evil for men to be idle, to lie, to steal, to cheat, to 
use false weights and measures, to violate engage- 



FIBST STEPS IN POLITICAL ECONOMY. 181 

ments, to live beyond one's means, or eyen up to 
tlaem. 

295. "We found it to be good conduct to sell one's 
labor, and having sold it, to render it as productive 
as possible to tlie purchaser. Good also to purchase 
labor, and having purchased it, to direct it to the 
best advantage, and punctually to pay the price of 
its liire. We found it to be good conduct to admin- 
ister capital successfuly, and to lend it to those who 
could afford to pay the highest rate of interest. We 
found it to be good conduct to provide good teach- 
ing and training for the young, and exceedingly bad 
conduct to neglect to make such provision. 

296. So far as we are able to judge from the ac- 
counts given us in books of history, the condition of 
the world into which the children of to-day have 
been born is far to be preferred to what that condi- 
tion was 500, 200, or even 50 years ago. 

The buildings, roads, docks, canals, harbors, ships 
and telegraphs which minister so wonderfully to our 
comforts, are the results of a large prevalence of the 
conduct we have called good. By like conduct these 
and additional comforts will be preserved and se- 
cured for future enjoyment, while bad conduct in- 
jures and destroys what exists and hinders the pro- 
duction of more. 



182 COMMON SENSE. 

297. We can now see clearly the rule or canon 
by wliicli to determine tlie cliaracter of conduct, and 
"wliat is good and evil. TJiaf, is good 7oMch on a bal- 
ance of all its consequeiices tends to promote human 
happiness ; arid that is EVIL lohich on a like considera- 
tion is found to tend to diminish it ; and tlie goodness 
or badness of conduct must be tested by its tendency 
to produce C9nsequences favorable or unfavorable to 
general well being. 



ERATUM. 

In chapter X. , page 85, the increased or diminished produc- 
tiveness of the mines has been accidentally omitted from the 
enumeration of causes which affect the supply and demand of 
gold and silver. 

NOTA BENE. 

Since 1868, when the above work was written, so great a change 
has occurred in the value of silver, owing to the great produc- 
tiveness of the mines in this country and the demonetization of 
silver in Germany, that a question which had no significance in 
1868 has now become one of importance. The law which estab- 
lished the meaning of the dollar, fixed it at 25.8 grains of stand- 
ard gold or 412J grains of standard silver. The fall in the value 
of silver which has happened in consequence of the two causes 
fcbove named, is just such an accident as is mentioned in chapter 
X., §155, of which every debtor may by law avail himself, except 
where otherwise provided by the contract. The fault lay with 
the ignorance of the pe«ple and of the Congress of 1837, in giv- 
ing the name " dollar" to two distinct things. 



APPENDIX, 



Mevietv Questions, 

Use following questions will enable the teacher to use this hook as 
a catechetical class hook ; or as a reading hook to he reviewed by aid of 
the questions. They will also aid students who have not the assistance 
of a teacher to ascertain lohen they have mastered the meaning of the 
text. 

In any case additional questions shoidd be introduced either hy the 
teacher to stimulate the interest of his class, or by the student to exercise 
his ingenuity, and to place the subjectbefore himself from different points 
of view. 

The questions may however be followed literally, and still cover the 
text in most eases. 

The author urges upon teachers to multiply appropriate questions, 
and loiih this view, these questions are designed to be suggestive as well 
as direct. 

He also recommends students who have not the assistance of a teacher, 
hut who are desirious of acquiring the all-important knowledge attempt- 
ed to be placed before them in this hook, and which they have not had 
the opportunity of acquiring at school, to form themselves into classes 
and to meet at each other's houses, or other convenient places, to catechize 
one another and discuss the subjects of the book. Chiefly to facilitate 
such exercises the black figures, (referring to the numbered paragraphs 
in the text,) are 'placed over the questions relating thereto. 



184 FIB8T STEPS IN POLITICAL ECONOMY. 



CHAPTEK I. 

1. 

1. Name some of the comforts enjoyed by children in the 
United States. 

2. Have you given much thought to the labor required to be 
performed to supply you with those comforts? If not, why not? 

4-12. 

4. Give the history of a woolen stocking, of a cotton phirt, of 
a stove, of a locomotive, of a plough, of a loaf of bread, of a loom, 
of a sewing machine, of a cup of cocoa, coffee or tea, etc. , etc. 

13. 

5. What is a plough ? A spinning machine ? A carding ma- 
chine? A spade? A pair of scissors ? A sewing machine? 

6. "What do men plough? What do men dig? When do men 
plough rather than dig, and when do they dig rather than plough ? 
What do men spin ? card ? weave ? What, with what, how, 
and why do men plough, dig, spin, card, weave, quarry, build, 
mine, forge, bake, boil, brew, cut, sew, fit, wash, write, print 
and publish ? 

14. 

7. What name is given to include all the necessaries and com- 
forts of life produced by labor ? 

8. Define wealth. 

Note. — This first chapter is a very important one, and too much 
pains cannot be bestowed upon its elucidation iintil the pupils 
have thoroughly mastered it. 

The younger the pupils the more objectively and fully the sub- 
jects referred to should be treated. 



APPENDIX. 185 

Models or drawings of the industrial implements spoken of and 
of any others which may suggest themselves to the teacher should 
be procured or made, and the interest of the pupils awakened and 
kept alive by presenting in new and varied aspects the objects 
common to their every day life. 



CHAPTEK n. 

18. 

9. Are all the necessaries of life wealth ? If not, name those 
which are not. 

19—21. 

11. Are earth, water, or air ever wealth ? If they are, state 
when and where. 

22. 

12. What does labor create ? 

13. What does labor do ? And illustrate your answer. 

23. 

14. What is a commodity ? 

24^. 

15. What kind of people produced the wealth we find now in 
existence ? 

16. Do all persons labor ? 

17. What relation exists between the proportion of the non- 
workers to the workers, and the amount of wealth produced ? 

25. 

18. How may the young become able and willing to labor. 



186 FIRST STEPS IN POLITICAL ECONOMY. 



19. What name is given to those who labor cheerfully and con- 
tinuously ? 

20. Define Industry. 

29. 

21. What do we live upon while tilling the ground, and sow- 
ing the seed ? 

22. What did the men who produced what we are now con- 
suming live upon while laboring to produce? 

30. 

23. Explain the chief distinction between the savage and civil 
ized man. 

33. 

24. How many principal harvests are there in a year in most 
countries ? 

25. How many appetites have you each day ? How many in the 
year? 

26. How shall one harvest be made to satisfy 3 X 365 or 1095 
appetites ? 

27. Are harvests always abundant ? 

28. How can the abundance of one harvest be made to supply 
the scarcity of another ? 

29. If the principle food of a people cannot be saved from one 
year to another could any provision be made against scarcity, 
and how ? 

30. What kind of peojDle are they likely to be who rely mainly 
on one perishable article for food ? 

31. Would they be likely to make such provision as is neces- 
sary, and if not, why not? 



APPENDIX. 187 

32. Contrast corn, wheat, rye, or rice with potatoes, and state 
what kind of people would be likely to use corn, wheat, rye, or 
rice, as their staple article of food, and what kind of peo- 
ple would rely upon potatoes, and give your reasons in each 
case. 

35. 

33. What do aqueducts, ships, docks, piers, canals, railroads, 
etc.} teach us with regard to saving in the past ; and how ? 

36. 

34. "What name is given to the quality of saving ? 

35. Is saving necessary in' the future, and why ? 

40. 

36. What is skill? 

87. What is knowledge ? 

38. Are skill and knowledge desirable, and why ? 

45. 

39. Name and define afresh, the four conditions of human 
well-being examined in this chapter. 

Note, — Although the answers to questions numbered 29 to 32 
are not directly furnished in the text, the deductions are so easy 
that the teacher will find no difficulty in leading his class to find 
out for themselves the truth on the matters referred to by the So- 
cratic process of leading the pupil by questions from one truth 
to another less obvious than the first. He will at the same time 
be training his pupils to think, and to think logically. 



188 FIRST STEPS m POLITICAL ECONOMY. 



CHAPTER III. 

46. 

40. What is Division of labor? 

47. 

41. Show how it affects the efficiency of labor. 

42. Give Adam Smith's illustration of the advantages of divi- 
sion of labor. 

48. 

43. Does the carpenter co-operate with the farmer to produce 
grain, and how ? Does the tailor co-operate with the potter to 
produce earthenware, and how ? 

44. Give various instances of the co-operation of one kind of 
workman with another, 

49. 

45. Do those engaged in household labors co-operate to pro- 
duce grain, ships, bridges, railroads, etc., and how? 

50. 

46. What has tended to throw household labors chiefly into 
the hands of women in this country ? 

51. 

47. For what other vocation do women seem to be specially 
adapted, and why? 



CHAPTER IV. 

53. 

48. What new duty is thrown upon the laborer by division of 
labor ? 



APPENDIX. 189 

55. 

49. On what will depend the quantity of commodities he will 

be able to procure ? 

\ 

.56. 

50. Does this bring into view any and what harmony of indus- 
try? 

51. Explain the consequences which would follow if man were 
so constituted as to seek the happiness of others without regard 
to his own. 



CHAPTER V. 

59. 

52. Why does man labor ? 

53. What would be the result of depriving him of what he had 
labored to produce ? 

61. 

54. How might protection to property be certainly and per- 
fectly secured? 

62. 

55. Why are taxes raised ? 

68. 

56. Out of what are taxes paid ? 

57. What eflfect has the paying of taxes on the inducement to 
labor and save ? 

64. 

58. What further difficulty exists in the way of affording pro- 
tection to property ? 



190 FIRST STEPS IN POLITICAL ECONOMY. 

59. What is the most efficient police ? 

66. 

60. Contrast the order of the scientific evolution of honesty as 
a condition of human well-being, with its proper place in teach- 
ing and training, and give reasons for the place you assign to it. 

67. 

61." How is society further injured by dishonesty? 

69. 

62. What is the limit to the power of the best of governments 
in regard to wealth ? 

71. 

63. Name some indirect consequences to society from dis- 
honesty. 

Note. — The teacher should not quit this chapter without giv- 
ing his pupils numerous illustrations both of honesty ^nd dis- 
honesty. 

The importance of truthfulness, the happiness existing in a 
community in which it prevails, the discomfort which attends 
its violation both in the case of individuals and of society, using 
illustrations to bring home to the conscience of every child the 
nature of true honor contrasted with its sham, should be min- 
utely dwelt upon and profusely illustrated. 

The care taken of the property of others, both public and pri- 
vate, as, for instance, of the school furniture, etc., will gauge 
pretty accurately the moral status of the scholars. 

The demoralization produced by examples of dishonesty, 
especially when successful, should also be pointed out. 

The consequences produced by national dishonesty in the 



APPENDIX. 191 

transfer of capital from the conntry where the dishonesty pre- 
vails, or the hindering its flow to such a country from others, 
should only be sligkty touched upon with very young pupils, 
but should be dwelt upon with older students. 



CHAPTER VI. 

75. 

64. How may the wealthless obtain a share of wealth to supply 
their immediate wants ? ' 

76. 

65. "Who have the enjoyment of the wealth employed in the 
purchase of the right to the future product of labor? 

77. 

66. I>sfine wages and capital. 

78—9—80. 

67. Are capitalists and laborers distinct persons ? Give illus- 
trations to prove your answer. 

68. What is interest ? 

82. 

69. What regulates the average rate of wages? Prove your 
answer. 

84—5. 

70. How are individual wages regulated ? 

71. Do high wages paid to one workmen diminish the wages 
paid to others ? If not, why not ? 



192 FIRST STEPS IX POLITICAL ECONOMY. 

72. What advantage has an inferior workman in being placed 
under a trustworthy foreman ? 

87. 

73. How may increased wages be obtained ? 

88. 

74. To what are wages proportioned ? 

75. What effect has such proportionment on general conduct ? 

89. 

76. Name some of the circumstances affecting the wages paid 
in different trades. 

90. 

77. AVhat should determine in this country the selection of a 
trade and of an employer, in the case of young persons about to 
learn a trade. 

91. 

78. How may a good workman free himself from a bad em- 
ployer ? 

92—3. 

'id. To what should workmen look as the cause of insufBciency 
in their wages, and how should they set aboiit obtaining good 
wages ? 



CHAPTER Vn. 

94. 

80. What induces the owner of wealth to employ it as capital ? 

81. What is profit ? 



APPENDIX. 193 

82. Is profit certain ? Prove your answer. 

95. 

83. Analyse profit. 

96. 

84. "What is the tendency of the rate of profit in different trades? 

97. 

85. Name some of the qualifications of a successful capitalist. 

98. 

86. Who, if any one, is benefitted besides the capitalist by the 
profit he realizes ? Prove your answer. 

99. 

87. Are the interests of capitalist and laborer antagonistic or 
coincident? Prove your answer. 

100. 

88. What is labor's best friend, and why? 



CHAPTER VIII. 

101—6. 

89. Ought property in land to be recognized ? 

90. Why or why not ? 

107-8. 

91. What is rent ? 

92. How does it arise ? 

93. Is the amount of rent always the same, and if not, what deter- 
mines its variations ? 

9 



194 FIBST STEPS IN POLITICAL ECONOMY. 

94. What considerations influence the aanount of rent a tenant 
may be willing to pay ? • 

109-10—11. 

95. Illustrate differences in and growth of rent. 

112. 

96. Is rent a cause of dearness ? 

97. Is it a result of comparative difficulty of production ? 

98. Prove your answer. 

99. Under what circumstances is rent a fitting subject for tax- 
ation ? 

113. 

100. What is the effect of competition among tenants ? 

111. 

■ 101. What is the difference between Europe and America with 
regard to the growth of rent ? 

113. 

102, What lesson is taught by the contrast, and how ? 

116. 

103. What common belief is now seen to be an error? 



CHAPTEK IX. 
117—118. 



104. What is value ? 



119-120. 

105. What is ' ' intrinsic " value ? 



APPENDIX. 195 

121. 

106. How is value determined and measured ? Give different 
illustrations in support of your answer. 

127—132. 

107. What is market value, and how is it regulated? Illus- 
trate your answer. 

133. 

108. "What services are rendered by the auccessful speculator ? 

134. 

109. What is meant by ' the equation of supply and demand' ? 

135—6. 

110. What is average value ? How is it regulated ? 

137. 

111. What are essential to the possession of value by any com-,' 
modity ? 

Note. — Care should be taken to clear up the prevailing ambi- 
guity in the use of the words "value " and "intrinsic valtie." 

The topic should not be left until the pupils have thoroughly 
clear ideas on the subject of value, and how it is measured and 
determined. 

The pupil should be required to suggest illustrations of the 
principles established in the text. 

Teacher and pupils alike will readily perceive that the ques- 
tions to this chapter, as to many of the others, are skeletons 
merely, to be filled out by them with numerous other questions 
suggested by the text, as well as by questions which will be sug- 
gested by the pupils' answers. 

Self-students will find a good practice in framing fresh ques- 
tions to themselves. 



196 FIEST STEPS IN POLITICAL ECONOMY. 



CHAPTEB X. 

138-89-40. 

112. What were the most important means adopted to facilitate 
interchange ? 

141. 

113. "What purposes are served by standards of measure, and 
how? 

114. How may the full advantages to be obtained from them 
be secured ? 

143. 

What name is given to the measure of value? 

144-143. 

115. What is essential to a measure of length? To ^ measure 
of value ? 

146. 

116. What had to be specially provided against in the selection 
of the standard measure of value ? 

147. 

117. What consideration mainly led to the selection of gold 
or silver as the material out of which to construct the measure 
of value ? 

148—51. 

118. Name the qualities which specially adapt gold and silver 
for that purpose. 

119. Do gold and silver fluctuate in value ? 

120. Where would you look for the cause of fluctuations in the 
value of gold as measured, (say) in iron rails, and why ? 



APPENDIX. 197 

152. 

121. Name the causes which affect the value of gold and silver. 

153. 

122. What would be the effect of an increase in the quantity of 
gold in any community upon the quantity of other commodities? 

154—156. 

123. Give an illustration of the difference between reduced 
currency, and a debased currency. 

Note. — The questions to Chapter X., as indeed to most of 
the chapters, are meant as indications only of the questions which 
the text siiggests. 

The teacher or self-student should supply many more, until 
certain that the subject is thoroughly mastered. 



CHAPTER XI. 

157. 

124. What is price? 

158-9. 

125. Describe the progress and effect of a rise in price in the 
case of any particular commodity ? 

126. Is a rise in price a bad thing ? 

127. If not, does it denote the existence of any, and of what 
evil? 

128. When the evil exists or is threatened, is the rise in price 
a good or bad thing, and why ? 



198 FIRST STEPS IN POLITICAL ECONOMY. 

160. 

129. What function is performed by the speculator ? 

101. 

130. Is there a conflict or harmony of interests between the 
speculator and the community in which his operations are con- 
ducted? 

131. What effect has this conflict or harmony on the skill, 
knowledge, and judgment of those engaged in commerce? 

162. 

132. Are the prices of commodities higher in the country from 
or to which they are exported ? 

133. What is the effect of the exportation of gold or silver ? 



CHAPTER Xn. 

163. 

134. What thought should be in the mind both of capitalist 
and laborer? 

164. 

135. What is a certain means by which profits and wages may 
.be increased ? 

166. 

136. What is meant by a combination ? 

167. 

137. Is any agreement needed to induce people to do what 
they think is for their interest ? 

138. Ought they to agree to do what is for their injury ? 



APPENDIX. 199 

168. 

139. How can laborers induce capitalists to convert wealth into 
capital ? 

140. What would be the effect upon the profits of capital- 
ists of a rise in wages without any increase in its productive- 
ness ? 

141. Would capitalists be induced thereby to increase or 
diminish the capital employed by them ? 

142. Is then a rise in the wages of all laborers possible other- 
wise than by increasing the productiveness of their labor ? 

143. Trace the effects of a combination to raise wages in some 
particular trade. 

169—170, 

144. What is a strike? 

145. Describe its effect ? 

171. 

146. What serves to conceal the effects of a strike ? 

172. 

147. Give an illustration of the loss resulting from a strike to 
those engaged in it. 

173. 

148. Who may be made more wealthy by a strike ? 

149. Who, besides those who make it, are injured by a strike? 

150. Show how long it would take to make up the loss occa- 
sioned by an apparently successful strike. 

174. 

151. What would be the effect of a strike entered into to pro- 
cure a reduction in the hours of labor ? 



200 FIRST STEPS IN POLITICAL ECONOMY. 

175, 

152. How might the hours of labor of the workers be advan- 
tageously reduced ? 

176. 

153. Give an illustration in support of your answer to the last 
question. 

177. 

154. Describe the conduct which has been pursued by Trades 
Unions. 

(1. ) With regard to the savings of its members. 
(2.) With regard to rendering labor more productive, or the 
reverse. 

179. 

155. For what purpose are capitalists likely to combine ? 
Describe the probable effects of such a combination. 

180—81, 

156. What is co-operation ? 

157. Who co-operate ? 

182. 

158. What is meant by a " Co-operative " shop ? 

159. What advantages, (if any,) does it present over other 
shops ? 

160. What is the chief difficulty in the way of securing those 
advantages ? 

183. 

161. Give some account of the most successful efforts to secure 
those advantages. 

162. What was the conduct of a Trades Union towards one of 
them? 



APPENDIX. 



201 



163. What shall be said of the workmen who submitted to the 
Trades Union in that instance ? 

164. What shall be said of workmen who submit to the tyranny 
of Trades Unions in other cases ? 

184, 

165. What is a " Co-operatiTe store? " What is the real nature 
of the payment made to the customers at such stores under the 
name of dividend ? 

185. 

166. To what has the success of "co-operative" stores aaid 
shops been chiefly owing. 

188. 

167. To which of the elements of profit does the large profit 
made by successful "co-operative" stores chiefly belong? 

168. How does the society become the owners of such profit? 

Note. — No amount of time will be too great to devote to the 
subject of this chapter. 

The history of many strikes should be obtained and communi- 
cated to the class. The rules of different trades unions, and 
especially their secret proceedings and traditional practices, 
which they take care to keep out of their books of rules, should 
be ascertained and laid before the pupils, who should be led hy 
the Socratic method of teaching to observe for themselves their per- 
nicious character. 

The beneficial effects of giving the employes an interest in 
the future result of their labors should be dwelt upon, but at the 
same time the fact should be made clear that, though the reward 
to labor may be thereby increaeed, it is only by the increased 

9-)f 



202 FIRST STEPS JN POLITICAL ECONOMY. 

value of the product of tlieir labor, and not by the defeating of 
any occult manoeuvres of hostile employers, that this result is 
secured. 



CHAPTER Xni, 

188-9. 

169. By what means can the labor of interchange be further 
diminished ? 

170. What is credit ? 

190. 

171. How can the full benefits of credit be realized ? 

172. '\Vho is relieved from all dijfficulty as to fulfilling his en- 
gagements ? 

173. Ought credit to be taken for purposes of unproductive 
consumption, and if not, why not ? 

191. 

174. Give an illustration of the benefits resulting from a judi- 
cious use of credit. 

175. Describe the precautions to be taken both in taking and 
giving credit. 

192. 

176. Is one who does not take credit under any obligation as to 
the persons to whom he gives credit? Give reasons for your 
answer. 

193. 

177. What is the effect of laws purporting to aid in the com- 
pulsory recovery of debts ? 



APPENDIX, 203 



CHAPTEE XIV. 

19d. 

178. By whom are Bills of Exchange said to have been in- 
vented ? 

179. Was their invention a benefit, and why? 

195. 

180. What is a Bill of Exchange ? 

196. 

181. Illustrate its use. 

182. What names are given to the various parties to a bill of 
exchange and to those into whose hands it passes? 

183. What is a foreign bill of Exchange ? 

184. What is an inland bill ? 

197. 

185. Between what places are the advantages of the use of bills 
of exchange greatest ? 

186. Describe the effects of a lack of probity or punctuality in 
the use of bills. 

198. 

187. What are Post Office money orders ? 

199. 

188. What is a promissory note ? 

200. 

189. What is the limit to the value of a bill or note discounted 
at the place where it is made payable ? 

190. What is the limit to the value of a bill or note drawn in z. 
place distant from that where it is sold or discounted ? 



204 FIRST STEPS IN POLITICAL ECONOMY. 

191. What is the rate of exchange ? 

192. When is the rate of exchange at par ? 

193. Suppose Ne-w York to owe more money to London, Paris 
and Hamburg, than those cities owe to New York, will bills on 
those places be above or below par? 

201. 

194. How is the par of exchange between two countries which 
have the same commodity as a measiire of value ascertained ? 

195. What is the par between the United States gold currency 
and that of England ? 

202. 

196. Ascertain the par of exchange between the United States 
debased paper currency, at various rates of its debasement, and 
the currencies of Great Britain, France and Germany respective- 

ly? 

263. 

197. Describe the complication introduced into the exchanges 
between this country and Great Britain ? 

NoTE.^The teacher should take the opportunity afforded by 
§ 194 to combat the prejudices which he will probably find some 
of his pupils will have imbibed against the Jews. He might 
make himself acquainted with some of the bitter cruelties and 
persecutions to which they were subjected by the peoples of Eu- 
rope through the ignorance and superstition of the latter ; while 
the degraded condition of Spain will furnish a striking illustra- 
tion of the natural punishment of such crimes. 

He should collect instances of the grand features in the char- 
acter of this remarkable race (the Jews), and particularly of their 
trustworthiness and larobity ; the facts regarding them proving 
that, in complete opposifion to the prevailing prejiidices. they 



APPENDIX. 205 

are far superior in honesty and general trustworthiness, wherever 
they are trusted, to the generality of other races. 



CHAPTER XV.^ 

205, 

198. Describe the primary function of a banker ? 

199. What is the commodity in ■which the banker deals ? 

206. 

200. Describe the mode of doing business with regard to (1) 
drawing accounts and (2) deposit accounts ? 

207. 

201. Describe the difference between a banker as the debtor of 
his customers and other debtors ? 

208—9—10. 

202. Describe the operation and effect of the discounting of 
commercial bills by bankers ? 

211—12. 

203. What is the Clearing House? 

204. Describe its advantages as regards economizing labor, and 
the amount of money each banker would, but for the Clearing . 
House, haye to keep on hand ? 

213-14. 

205. Give some account of the New York Clearing House? 



206 FIRST STEPS IN POLITICAL ECONOMY. 

215-16. 

206. What unexpected advantages have accrued from the ea- 
tablishment of the New York Clearing House ? 

219. 

207. What are the principal obj ections to the National Bank 
Act? 

220. 

208. What are savings banks ? 

209. What is the nature of their accounts ? 

210. What rules should govern their management, and why ? 

221. 

211. What are some of the special advantages furnished by 
savings banks ? 

212. What should be the most important consideration with 
depositors at those banks ? 



CHAPTEK XVL 

223. 

213. What is interest ? 

224. 

214. What is it persons really desire to borrow when they ask 
for a loan ? 

215. Name some errors common with persons who speak of 
money and interest ? 

225. 

216. What determines the market rate of interest ? [Demand 



APPENDIX, 207 

and supply. ] 

217. What limits the market rate of interest? 

* 226. 

218. What limits the average rate of interest? 

227—8. 

219. Explain the tendency of labor and capital to flow to this 
country from Europe, and how this tendency may be checked. 

220. What is the effect of competition among capitalists for the 
capital coming from Europe upon the wages of labor, and the 
administration of capital ? 

229. 

221. What is the eflfect of usury laws ? 

2S0. 

222. Analyze interest and point out the elements which are 
most liable to fluctuations. 



CHAPTEE XVII. 

2S1—2. 

223. What is paper money ? 

233, 

224. With what kind of paper money is the name generally 
associated ? 

234. 

225. What is a dollar? 



208 FIRI^T STEPS IN POLITICAL ECONOMY. 

226. What is the promise made by the maker of a note or bill 
which specifies a promise to pay a given number of dollars ? 

227. Is the promise performed by giving for it another prom- 
ise? 

228. What is the character of men who refuse to fulfill their 
promises, but offer instead only another promise ? 

235- G. 

229. How can confidence in the performance of promises be 
established ? 

230. If you were quite sure that the promise on a bill to pay a 
given number of dollars would be performed on request, which 
would you rather have to carry about with you, a bill promising 
to pay one thousand dollars, or one thousand dollars in gold or 
silver ? 

231. If you would rather have the promise than the metal, 
what do you think other people would generally desire, and 
why ? 

237. 

232. How could more promises to pay be made to circulate 
than people required ? 

238. 

233. What is an inconvertible paper money ? 

239. 

234. What must be said of the intelligence and honesty of a 
people among whom an inconvertible paper currency prevails ? 

240. 

235. Who are the greatest sufferers by a depreciated currency ? 

241-3. 

236. Did the forcing an inconvertible currency upon the peo- 



APPENDIX. 209 

pie of tlie United States give additional resources to the govern- 
ment for the prosecution of the civil war? s 

237. Describe its actual effect. 

244. 

238. Show how the history of the depreciation of the currency 
of the United States illustrates the truth of your answer to the 
last question. 

245, 6—7. 

239. Describe the commercial condition attending a progres- 
sive depreciation of the currency, and of attempts to return to 
honest dealing. 

248. 

240. Of what does the currency of the United States consist 
irrespective of commercial credits ? 

249. 

241. Contrast the course adopted by the French since the 
Franco-Prussian war with ours, since our civil war. 

250. 

242. What regulations should government prescribe for the 
conduct of the business of baking ? 

243. "What regulations should government prescribe for the 
conduct of the business of banking ? 



CHAPTEE XVin. 
251. 



244. What is a crisis ? 

245. What is a panic ? 



210 FIRST STEPS IN POLITICAL ECONOMY. 

24:6. What would render commercial crises and panics impos- 
sible ? 

252. 

247. Describe the cause and effects of a general state of com- 
mercial mistrust. 

253. 

248. "What conduct should be pursued by laborers to protect 
themselves from suffering through displacement occasioned by 
commercial failures ? 

254-6. 

249. Describe the rise and progress of a commercial crisis ? 

257. 

. 250. How may unwise legislation convert a crisis into a 
panic ? 

258. . 

251. What is the cause of a crisis ? 

259. 

252. Describe the effect upon the currency of the destruct 
of credit ? 

253. How does credit postpone a demand for money ? 

260-1. 

254. Point out how the evils of legislative interference are most 
felt in times of commercial mistrust ? 

262. 

255. How may commercirl crises and panics be prevented ? 



APPENDIX. 211 



CHAPTER XIX. 

263. 

256. So far as yet examined, what have we found to be the 
effect of legislative interference with commerce ? 

264—5. 

257. What is foreign commerce ? 

258. How has foreign commerce arisen ? 

266. 

259. "What conflict has been found between the commercial in- 
teresta of any one part of the world with those of any other ? 

260. What harmony has been apparent ? 

267. 

261. By whom and how has the such harmony been inter- 
fered with ? 

262. Could such interference be justifiable under any circum- 
stances ? 

268—9. 

263. What question is involved in every proposal to impose a 
tariff on foreign produce ? 

270. 

264. What would seem to be a more logical course of pro- 
ceeding ? 

265. What do the directors of labor and capital do when not 
interfered with ? 

266. Ought legislators to interfere with their so doing, and 
if not, why not ? 



212 FIRST STEPS IN POLITICAL ECONOMY. 



267. What determiaes tlie nature of the trade between differ- 
ent places ? 

272. 

268. "What would naturally be the articles generally produced 
(1) in densely peopled countries ; (2) in less thickly peopled 
countries, the state of civilization being supposed equal ? 

269. Does government protect the producer in the enjoyment 
of what he has produced by imposing restraints upon his liberty 
to exchange his products for anything else he desires ? 

273. 

270. How has the cry, " Protection to native industry," 
arisen ? 

274=. 

271. What is pauper labor ? 

272. What is likely to have been the object of persons using 
that expression ? 

275. 

273. How has the farmer been " protected" by preventing him 
from exchanging his corn for iron from England, Sweden or Sar- 
dinia ? 

274. Why could not the American iron-master compete with 
the English or Swedish ? 

276. 

275. What is a pauper ? 

276. On whose industry do the laborers of Europe subsist ? 

277. On whose industry do the iron-masters of Pennsylvania 
and cotton spinners of Lowell subsist, at least in part ? 

27i-^. Do they themselves assert that their own labor is not suf- 
ficiently productive to support them ? Prove your answer. 
279. Who, then, are paupers ? 



APPENDIX. 213 

277. 

280. Can it be true that the civilized farmer of the United 
States cannot " compete" with the Boers or Kaffirs of Africa ? 

281. What is a competing man ? 

282. What advantage do Europe and America gain in exchang- 
ing their products for the wool raised by the Boer or Kaffir ? 

283. What advantage does the Boer or Kaffir get by the ex- 
change ? 

278. 

284. Does the imposition of a tariff increase or diminish the 
burthen of taxation ? 

279. 

285. Can any and what part of the duty on imported goods be 
thrown upon the people of the country exporting them ? 

286. When, by reason of the duty, goods cease to be imported, 
what is the effect upon the people ? Upon those who' produce 
the taxed commodity ? 

287. In which case would the loss to the people be less ; (1. ) to 
continue the tax whereby the importation is prevented, or (2. ) to 
raise by direct taxation a sum, equal to the rate of duty multi- 
plied by the entire amount consumed, and to hand that sum 
over directly to those engaged in producing the taxed commodtiy 
on condition that they never did another stroke of work so long 
as the like payment continued to be yearly made to them ? 

280. 

288. What particular anomaly is presented in the cry for " pro- 
tection" on account of the heavy taxes paid by the people, of the 
United States ? 

281. 

289. Can the fact that wages, rents, and taxes are lower among 



214 FIBST STEPS jy POLITICAL ECONOMY. 

other nations than with us render customs duties desirable to 
"protect" our industry? If not, why not? 

2S2. 

290. Is any additional source of employment obtained for 
labor by any amount of customs duties ? If not, why not ? 

283. 

291. Name some of the moral objections to a Tariff. 

284—8. 

292. Give some illustrations from the business of assaying and 
mining of the effects of customs duties in diminishing the em- 
ployment for and the productiveness of labor. 

293. Give illustrations from any other trades. 

294. What has been the effect of the Tariff on the real wages of 
skilled laborers in this country ? 

295. What has been its effect on unskilled labor ? 

296. What effect is it likely to have on the class of persons im- 
migrating to this country ? 

289—90. 

297. What relation existed between the British corn laws and 
the Irish famine of 1846-7. 



CHAPTER XX. 

291. 

298. Has the student of the foregoing pages learned all that is 
known of the science of human well-being ? 



APPENDIX, 215 

292, 

299. What has lie learned ? 

293. 

300. What apparent exceptions will he meet with to the laws 
he has examined ? 

301. Should such exceptions discourage him, and if not, why 
not? 

302. Where may he expect to find the cause of undeserved 
success or of unmerited misfortune ? 

294-5. 

303. What acts have been found to be good, and what evil, 
and why ? 

296. 

304. How come we to be better off to-day than our predeces- 
sors ? 

297. 

305. How may we provide that our successors shall be yet bet- 
ter provided for than we are ? 

298. 

306. Lay down a canon for determining good and evix. 

307. How shall the goodness or badness of conduct be deter- 
mined ? 



APPENDIX. 

NEW BOOKS. 

EVOLUTION AND PROGRESS: 

By Eev. Wm. I. Gill, A. M "Orice $1 50 

ANAL YTICAL PR CESSES : • 

By Rev. Wm. I. Gill, A. M " 2 00 

ECCLESIOLOGY: 

By Kev. E. J. Fish, D. D «' 2 00 

GOLE AND FREE BANKS: 

ByM. E. Pilon " 75 

TEE MANUSCRIPT MANUAL: • 

An Aid to Authors " 10 

IRENE; or, BEACH-BROKEN BIL- 
LOWS : 

By Mrs. B. F. Baer " 125 

WILD FLOWERS. Poems: 

By C. W. Hubner «' 125 

EER WAITING HEART: 

By Lou. Capsadell " 1 25 

SHADOWED PERILS: 

ByM. A. Avery " 125 

WOMEN'S SECRETS; or, HOW 
TO BE BEAUTIFUL : 

By Lou. Capsadell " 75 

EGYPT . ENNIS ; or, PRISONS 
WITHOUT WALLS. 

By Kelsie Etheridge " 50 

THE TRAVELERS' GRAB BAG : 

By an Old Traveler " 50 

NINE LITTLE BUSTERS: 

By Kelsie Etheridge " 25 

Inclose three-cent stamp for pamphlet, comprising de- 
descriptive catalogue, and the plan of organization and 
working ot The Authors' Publishing Comj^any. Address 

THE AUTHORS' PUBLISHING CO., 

27 BOXD ST., NEW YORK. 



